Asia stocks extend global slide on intensifying trade row

[TOKYO] Global stocks extended a sell-off on Tuesday as mounting trade tensions between the United States and other major economies continued to steer investors away from riskier assets, lifting safe-haven US Treasuries and keeping the US dollar on the defensive.

Equities in Asia took their cues from Wall Street, where the S&P 500 and Nasdaq suffered their steepest losses in more than two months overnight.

US technology shares were particularly hard hit. Chipmakers which derive much of their revenue from China took a battering, following a report on Monday that the US Treasury Department was drafting curbs that would block companies with at least 25 per cent Chinese ownership from buying US tech firms.

Besides the trade spat with China, the United States has recently upped the ante in a challenge to the European Union by threatening to impose tariffs on cars imported from the bloc.

MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.1 per cent.

Japan's Nikkei lost 0.4 per cent, Shanghai tumbled 1.1 per cent, while Hong Kong slid 0.5 per cent. South Korea's KOSPI fell 0.55 per cent and Australian stocks dropped 0.6 per cent.

Singapore's Straits Times Index was down 0.35 per cent at 3,249.3 as of 9:50am.

"Increasingly hawkish trade rhetoric the United States is employing could begin impacting the economy by cooling investor sentiment and curbing capital expenditure by corporations," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management.

"It's turning out to be a long-term bearish factor for the financial markets, as the United States is unlikely to back down at least through its midterm elections."

The dollar index against a basket of six major currencies stood little changed at 94.302 after dipping 0.25 percent overnight, when it fell for the fourth straight session.

The greenback was pressured as long-term US Treasury yields declined to one-week lows amid the heightened risk aversion in financial markets.

The euro hovered just below an 11-day high of US$1.1713 scaled overnight against the sagging dollar.

The US currency was down 0.2 per cent at 109.525 yen, having fallen to a two-week low of 109.365 on Monday. The yen often attracts bids in times of political tensions and market turmoil.

Brent crude oil futures were up 0.3 per cent at US$74.95. The contracts had slid 1 per cent overnight as receding investor risk appetite weighed on commodities.

Oil prices have seesawed after Opec and its allies on Friday agreed to increase global supplies, albeit modestly.

REUTERS