Asia markets stumble as US-China trade war fears return

Singapore durian vendorSingapore durian fruit

Markets around Asia were lower at midday on Wednesday after trade war fears saw a resurgence.

Singapore’s Straits Times Index was down 1.19 percent by midday, while Hong Kong’s Hang Seng Index shed 1.44 percent, Japan’s Nikkei lost 1.91 percent and Malaysia’s KLCI was off 0.22 percent.

That was after Wall Street erased early gains on Tuesday, following fresh trade saber-rattling from the U.S.; the Dow Jones Industrial Average ended down 1.43 percent, the Nasdaq tumbled 2.93 percent and the S&P 500 lost 1.73 percent.

Analysts pointed to the trade uncertainty.

“Wall Street’s rebound fizzled as investors are still trying to figure what the U.S. administration is doing on the protectionist front,” Stephen Innes, head of trading for Asia Pacific at OANDA, said in a note on Wednesday. “On the one hand, we get a relief rally on the perception that the trade war was over before it even began. And now the administration is looking to clamp down on Chinese takeovers, while Commerce Secretary Wilbur Ross indicated Trump is planning ‘other action’ on trade.”

Innes said the uncertainty over U.S. protectionism may stick around for awhile and investors should prepare for a long drawn and “perhaps more rancorous” talks between the U.S. and China on concerns over intellectual property rights.

“Best get used to the new normal especially around the S&P post with the president considering passing emergency law to restrict China takeovers of tech sectors companies,” Innes said.