Asian stocks drop on uncertainty over U.S. trade tariffs

ASX 200 dropped 1%, Shanghai Shenzhen CSI 300 and Shanghai Composite indexes dipped 0.7% and 1%, respectively, Hang Seng index shed 0.2%, Nikkei 225 index slipped 0.3%, while the TOPIX shed 0.4%

Most Asian stocks dropped on Wednesday, tracking overnight losses on Wall Street as investors grappled with increased uncertainty over U.S. trade tariffs, with Australian and Chinese markets taking little support from positive economic readings.

Regional markets took negative cues from Wall Street, which marked a tepid start to September after an appeals court ruled against Trump’s tariffs, which could complicate recent trade deals struck by Washington with other major economies.

But U.S.’ S&P 500 Futures gained 0.1% in Asian trade, supported by optimism over Google owner Alphabet Inc after an antitrust ruling against the firm did not outline as harsh a penalty as initially feared.

But this offered little support to Asian markets, which were also due for some profit-taking following strong gains in August. Chinese shares were especially hit by this trend.

Australia’s ASX 200 index was the worst performer in Asia, dropping 1%.

The drop came chiefly after GDP data showed Australia’s economy grew more than expected in the second quarter, amid support from strong domestic demand and steady government spending.

But the signs of strength in the Australian economy, especially in consumer spending, dented expectations for more easing by the RBA.

The pickup in domestic demand raises the risks that the RBA won’t loosen policy as aggressively as we’re predicting, Capital Economics analysts wrote in a note, adding that the strong pick-up in activity also came amid concerns over a tight labour market and increasing signs of sticky inflation.

The RBA cut interest rates thrice so far this year, but flagged continued caution over further cuts due to signs of sticky inflation.

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes dipped 0.7% and 1%, respectively, while Hong Kong’s Hang Seng index shed 0.2% in volatile trade.

Broader Asian markets moved in a flat-to-low range. South Korea’s KOSPI was an exception, gaining 0.3% as GDP data for the second quarter read stronger than expected. But further gains in the KOSPI were held back by weakness in technology stocks.

Japan’s Nikkei 225 index slipped 0.3%, while the TOPIX shed 0.4%, even as PMI data read stronger than expected for August.