Stock Futures Gain on Hints of Tariff Compromise: Markets Wrap

(Bloomberg) — Stock markets staged a relief rally on speculation the US administration may walk back some tariffs.

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US and European equity-index futures advanced after US Commerce Secretary Howard Lutnick hinted at a compromise on the levies. The euro gained and bund yields surged 19 basis points, the most since 2023, on Germany’s plan to unlock hundreds of billions of euros for defense and infrastructure investments. Ten-year Treasuries edged lower, while the dollar weakened.

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.”

“The market seems to be pricing in the idea that the Trump administration is seeking a deal,” said Tomo Kinoshita, global market strategist at Invesco Asset Management.

Frantic moves lashed markets all day Tuesday, as sentiment shifted quickly amid the slew of news. US stocks first plunged, then recovered, before falling anew at session’s end. While the S&P 500 closed down 1.2%, equities gained in late trading after Lutnick’s comments.

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In an address to Congress, Trump acknowledged that there may be an “adjustment period” to tariffs as he defended his policies to remake the US economy. He also called for an end to a $52 billion semiconductor subsidy program and repeated the 25% tariffs for aluminum, copper and steel.

Read: Trump Warns of Tariff ‘Disturbance’ as He Touts Trade Plans

Germany’s 10-year bund yields spiked on the prospect of additional debt sales to fund the historic spending shift. The move upends Germany’s ironclad controls on government borrowing in response to signals from the US that it’s dialing down security support for Europe. The euro added 0.3% versus the dollar, adding to Tuesday’s jump.

Hong Kong shares outperformed after the National People’s Congress in Beijing set an economic growth target of about 5% for 2025, the third straight year it has maintained that goal. Given the broadening global uncertainty on tariffs and geopolitics, economists expect Chinese officials to add stimulus.

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