Global stock markets continued to decline on Tuesday as investors continued to worry about trade tensions between the United States and China. Chinese markets suffered the greatest losses, with the Shanghai Composite falling 0.66 percent as of 1:19 p.m. HK/SIN. The index had slumped more than 1 percent in early trade before recovering slightly. The Shanghai Composite is facing the possibility of ending in bear market territory if it ends the day with a loss greater than 0.5 percent. Bear territory is classified as showing a fall of 20 percent or more from 52-week highs.
South Korea’s Kospi was down 0.37 percent and Hong Kong’s Hang Seng Index was down 0.26 percent. The Nikkei 225 was a modest 0.03 percent lower. The declines in Asia came after Wall Street exchanges suffered their worst day in over two months overnight.
The tech sector led the losses on Wall Street as investors showed concern about a sector that is heavily-reliant on Chinese revenue. Reports out on Monday showed that the U.S. Treasury Department was mulling restrictions on companies with at least 25 percent ownership from purchasing U.S. tech firms. As reported by CNBC, Treasury Secretary Steven Mnuchin said that the restriction on Chinese investments was “fake news”, but that investment restrictions would soon be applied to all countries, not just China. Still, investors remain confused, as a statement from White House economic advisor Peter Navarro mentioned that there were “no plans” to block foreign investments.
As reported by the Wall Street Journal on Monday, Chinese President Xi Jinping said last week that he will not hesitate to take action against the U.S. if needed. “In the West you have the notion that if somebody hits you on the left cheek, you turn the other cheek,” Xi said. “In our culture, we punch bac,” he said in a statement to the Global CEO Council. The comments of both U.S. and Chinese leaders have crushed risk appetite and suggested to investors that the trade war won’t be ending in the near future.