Global trade worries returned to the fore on Friday, sending Asia-Pacific stocks lower after Donald Trump threatened to leave the World Trade Organisation.
Mr Trump on Thursday threatened to pull the US out of the WTO, with his comments coming as US negotiators were working with their Canadian counterparts to strike a deal to revamp Nafta by Friday.
“If they don’t shape up, I would withdraw from the WTO,” Mr Trump warned in an interview with Bloomberg News.
It has been a rollercoaster week for global trade deals after the US and Mexico agreed new trade terms earlier this week and media reports said Mr Trump intends to roll out $200bn in new tariffs on China as soon as a comment period ends next week.
Kerry Craig, global market strategist for JPMorgan Asset Management said it was the not the first time Mr Trump had threatened to leave the WTO and that the next tranche of tariffs had been foreshadowed.
“This doesn’t make it any easier for the market to digest and I’d expect this to dampen sentiment across the APAC region today.” Mr Craig said. “The stronger US [dollar] is the biggest near term challenge for Asian markets. The greenback has been in decline for the last couple of weeks, but may start to rise again on political uncertainty.”
US stocks retreated on Thursday with the S&P 500 ending the day 0.4 per cent lower and the Nasdaq 0.1 per cent.
In Asia on Friday, Hong Kong’s Hang Seng fell 1.3 per cent as index heavyweight Tencent tumbled more than 5 per cent after China announced plans to limit online game releases.
Domestic markets in mainland China also pulled back with the CSI 300 of Shanghai and Shenzhen stocks down 0.6 per cent putting it on track to erase the week’s gains.
In Japan, the Topix was down 0.1 per cent as the financials sector shed 0.3 per cent and the basic materials sector fell 0.7 per cent.
Australia’s S&P/ASX 200 was 0.1 per cent lower as basic materials slipped 0.8 per cent as miners fell.