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Hong Kong - The sell-off on Asian markets showed no sign of letting up on Wednesday with investors fearing an escalation in the China-US trade row after Beijing said it planned to impose anti-dumping sanctions worth billions on Washington.
The news adds to a sense of pessimism across trading floors in recent weeks as the world's top two economic powers stand on the cusp of an all-out trade war that observers fear could batter the global economy.
It also comes as dealers struggle to deal with a brewing emerging-market financial crisis and overshadows hopeful noises from Canada that a revised NAFTA deal is "imminently possible".
China said on Tuesday it would ask the World Trade Organization next week for permission to impose more than $7bn in sanctions annually on the United States over anti-dumping practices. The WTO will discuss the issue on September 21.
The case dates back to December 2013, when China took issue with the way Washington assesses whether exports have been "dumped" at unfairly low prices onto the US market.
Beijing's call comes after Donald Trump threatened to impose tariffs on all goods coming from China, which he says is using unfair trade practices that are harming American jobs. He has also railed against his country's massive trade deficit with China, which hit a record high last month.
Hong Kong was again among the worst performers, having fallen into a bear market on Tuesday - marking a 20% fall from its record high touched in January.
'Downside risk'
The Hang Seng Index was down 0.8% in the morning while Shanghai dropped 0.6% to sit around levels last seen at the very beginning of 2016.
Tokyo ended the morning 0.4% lower, Sydney fell 0.1% and Seoul lost 0.3%. Singapore was flat, and Wellington and Taipei each fell 0.5%.
"We are concerned that trade tensions are adding to the downside risks to growth," Sneha Sanghvi, head of Asian financial markets at Westpac, told Bloomberg TV.
"We are seeing heightened volatility and risk aversion in financial markets - that trend is likely to continue for the next few weeks."
The losses came despite a positive lead from Wall Street, where energy firms were boosted by a more than two percent rally in oil and technology firms were supported by bargain-buying.
Crude prices continued to rise in Asia after US data showed a sharp drop in US inventories, while looming sanctions on Iran and Hurricane Florence's imminent impact on the Carolinas are also keeping the commodity elevated.
Energy firms were mostly up with Japan's Inpex and Sydney-listed Woodside Petroleum more than two percent higher while CNOOC put on more than one percent in Hong Kong.
"There is a strong possibility Hurricane Florence moves to a Category Five storm before it hits land and it is already a major disruptor on the US east coast gasoline market as mass evacuations stretch supplies and Florence's heavy rains endangers major fuel pipelines," said Rodrigo Catril, senior foreign exchange strategist at National Australia Bank
