Asian stocks advance after whipsawing on tariffs

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

Asian stocks rose as US Commerce Secretary Howard Lutnick suggested the Trump administration may walk back some tariffs that sparked a global selloff in markets.

Hong Kong shares outperformed, and a regional gauge rose after China set a 5% growth target, following mayhem on Tuesday that saw MSCI’s all-country stock index fall back to near its level from the start of this year. Equity-index futures for the US and Europe advanced in Asia, echoing gains overnight after Lutnick hinted at a compromise with Canada and Mexico within hours of the levies kicking in.

At China’s National People’s Congress starting Wednesday, Beijing set an economic growth target of about 5% for 2025, a third straight year it has maintained that goal. Given the broadening global uncertainty, economists expect officials to add stimulus.

“There’s nothing to nitpick, just a robust growth target, and a clear intention to support the economy,” said Vey-Sern Ling, managing director at Union Bancaire Privee. “They’re saying all the right things on employment, housing market, stock market.”

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.

“The market seems to be pricing in the idea that the Trump administration is seeking a deal, rather than focusing on the potential inflationary impact of additional tariffs for the US,” said Tomo Kinoshita, global market strategist at Invesco Asset Management.

In the same report, China 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 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.

In commodities, oil extended its decline and gold edged lower after gaining in the previous session.