Asian shares fluctuate on hints of tariff relief

Synopsis

Equities opened lower in Sydney and mixed in Tokyo after mayhem on Tuesday that saw a global index approach levels from the start of this year. Contracts for the S&P 500 rose 0.8% — after the index dropped 1.2% on Tuesday — echoing gains in late trading after Lutnick hinted at a compromise with Canada and Mexico.

Stocks stayed volatile in Asia after US Commerce Secretary Howard Lutnick suggested the Trump administration may walk back some tariffs that sparked a global selloff in markets.

Equities opened lower in Sydney and mixed in Tokyo after mayhem on Tuesday that saw a global index approach levels from the start of this year. Contracts for the S&P 500 rose 0.8% — after the index dropped 1.2% on Tuesday — echoing gains in late trading after Lutnick hinted at a compromise with Canada and Mexico. That was within hours of the US imposing the largest set of new tariffs in nearly a century on goods from its neighbors and China.

Frantic moves lashed markets all day Tuesday, as sentiment shifted quickly amid uncertainty around President Donald Trump’s trade war and Germany abandoning fiscal shackles to transform Europe’s defenses. The swings in the US — before his address Tuesday night to Congress — mark a new phase in Trump’s broadening economic and diplomatic reset of America’s place in the world.

“It remains very unclear on just how long these tariffs will remain,” said Clark Geranen, chief market strategist at CalBay Investments. “We tend to believe these are more of a negotiation tactic and not the start of a long and drawn out reciprocal trade war. Still, in these situations, investors sell first and ask questions later.”

China set its economic growth goal at about 5% for 2025. The country boosted its budget deficit to the highest in 30 years, as it battles deflation, a property crash and now a trade war with the US. Policy makers also set an inflation goal of 2%, down from a longstanding 3% target. The yuan weakened slightly on the announcements.

The Nasdaq 100 lost 0.4% on Tuesday. An index of US-listed Chinese shares gained 2%, as Beijing’s response to the tariffs remained muted and traders looked to the annual National People’s Congress.

The yield on 10-year Treasuries slipped Wednesday. A dollar gauge slid for a third day.

The US could announce a pathway for tariff relief on Mexican and Canadian goods covered by North America’s free trade agreement as soon as Wednesday, Lutnick told Fox Business. He added that tariffs would likely land “somewhere in the middle,” with Trump “moving with the Canadians and Mexicans, but not all the way.”

In European news, Germany said it will unlock hundreds of billions of euros for defense and infrastructure investments in a dramatic shift that upends its ironclad controls on government borrowing. The euro slipped against the dollar after rising more than 1% in each of the last two sessions.

If Wall Street learned one thing during Trump’s first term as president, it’s that the stock market is a way he keeps score. The theory was that the president’s penchant for using equities as a report card meant any policy that rattled markets would cause him to revise the plans. But with stocks tanking, investment pros are starting to question if there’s a “Trump Put” after all.

“Where’s the Trump Put?,” said Tom Essaye at The Sevens Report. “At what level of stock market ‘pain’ would Trump and the administration reverse course? Obviously, we don’t know the exact number, but if we look back at Trade War 1.0, history implies the ‘Trump Put’ would be elected around a 10% decline in the S&P 500.”

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