Stock markets slipped broadly on Thursday while government bonds attracted safe-haven demand amid mounting investor concerns that growing trade tensions would hurt the global economy.
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS dropped 0.45 percent.
The Asian markets took their cues from Wall Street shares, which fell for the third straight session overnight after US President Donald Trump sought to impose fresh tariffs on China, intensifying fears of a trade war.
Boeing Co (BA.N), seen as particularly vulnerable to retaliation from US trade partners, fell 2.5 per cent, leading the losers on the Dow .DJI.
Equity market losses were widespread, with the pan-European FTSEurofirst 300 index .FTEU3 shedding 0.14 per cent overnight and MSCI's global stock index .MIWD00000PUS losing 0.46 per cent.
Hong Kong's Hang Seng .HSI dropped 0.75 per cent, Australian stocks fell 0.4 per cent and South Korea's KOSPI .KS11 lost 0.45 per cent. Japan's Nikkei .N225 was down 0.85 per cent but still up roughly 0.6 per cent on the week.
“The equity market has been holding up relatively well, but it will have to decline some more if US shares deepen their losses,” said Yutaka Miura, senior technical analyst at Mizuho Securities in Tokyo.
“Bargain hunters buy steadily at price dips, but most participants are wary of chasing highs amid lingering uncertainty about trade and politics.”
The benchmark 10-year Treasury yield US10YT=RR dipped to 2.806 per cent and headed for its fourth day of declines amid rising diplomatic tension between Britain and Russia, soft US retail sales data and concerns over Washington’s political and trade issues.
The specter of a trade war also boosted demand for European debt, with the German 10-year bund yield DE10YT=RR falling to a 1-1/2-month low of 0.583 percent. Yields on British gilts and French government bonds also fell.
In the currency market, the dollar came under pressure again after the greenback managed a modest bounce overnight following three days of losses.
The dollar index against a basket of six major currencies .DXY lost 0.05 per cent to 89.655. It was on track to fall about 0.5 per cent this week, dogged by trade tensions and perceived political turmoil in Washington.
The euro edged up 0.1 per cent to $1.2379 EUR= after being pulled back from a six-day high of $1.2413 when European Central Bank President Mario Draghi on Wednesday struck a dovish tone regarding monetary policy.
The yen, often sought in times of risk aversion, gained against a variety of peers.
The dollar slipped 0.4 per cent to 105.895 yen JPY= after taking a hit the previous day on Trump's firing of U.S. Secretary of State Rex Tillerson. The euro fell 0.3 per cent to 131.115 yen EURJPY= and the Australian dollar shed 0.35 per cent to 83.46 yen AUDJPY=.
US crude futures CLc1 extended gains to rise 0.1 per cent to $61.04 per barrel. Brent added 0.05 per cent to $64.92 per barrel LCOc1.
Crude was lifted the previous day after data showed a bigger-than-expected fall in US refined product inventories with gasoline demand rising to a seven-month high.
Safe-haven gold rose, with spot prices gaining 0.2 per cent to $1,327.81 an ounce XAU=.