TOKYO- Asian stocks fell the most in a week as the United States and China’s broadening dispute over trade and foreign policy showed little sign of coming to an end, weighing on global economic growth.
MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.44 percent. Chinese shares fell 0.47 percent after briefly touching a five-week low. Australian shares were down 0.76 percent.
The US Treasury yield curve steepened in Asia after US Federal Reserve Chair Jerome Powell signaled further interest rate cuts and the resumption of bond purchases to address a recent spike in money markets rates.
Oil prices extended declines as US visa restrictions on Chinese officials and the addition of more Chinese companies to a US trade blacklist weighed on already slim hopes that Washington and Beijing could reach a truce at trade negotiations this week.
The United States and China are engaged in a year-long row that has slowly expanded beyond trade policy, suggesting even more damage to an already fragile global economy.
“Stock markets are still trying to price in the slowdown in global growth,” said Kiyoshi Ishigane, chief fund manager at Mitsubishi UFJ Kokusai Asset Management Co in Tokyo.
“The dispute between the United States and China shows no sign of ending. We’re losing confidence in the US economy. There’s more uncertainty about where the Fed is really headed.”
US stock futures rose 0.22 percent in Asia, but sentiment was weak after the S&P 500 ended 1.56 percent lower on Tuesday in response to the US visa restrictions.
Japan’s Nikkei slid 0.7 percent, its biggest decline in a week. Hong Kong shares fell 0.52 percent, nearing a four-week low due to persistent worries about often violent protest against China’s rule of the former British colony.
Shares fell in Apple Inc’s suppliers in Greater China, such as Luxshare Precision and O-Film Tech, after China’s state media criticized the iPhone maker for an app use by Hong Kong protesters.
The US State Department announced the visa restrictions just a day after the US Commerce Department cited the mistreatment of Uighur Muslims in China in its decision to add 20 Chinese public security bureaus and eight companies to a trade blacklist. – Reuters