MercoPress. South Atlantic News Agency

Asian markets plummet on concern over China/US trade deal; Beijing negotiator expected in Washington

After months of healthy gains across markets this year, Donald Trump's threat to hike tariffs on a raft of Chinese imports sent shockwaves around the world

A red wave swept across Asia trading floors on Wednesday as investors grow increasingly concerned that the China-US trade deal, which appeared all by ready to sign, could fall through.

After months of healthy gains across markets this year, Donald Trump's threat to hike tariffs on a raft of Chinese imports from Friday sent shockwaves around the world and rekindled the scenario of a painful trade war between the planet's biggest economies.

And while Beijing insisted it would still send its top negotiator to planned talks in the US on Thursday and Friday, observers said confidence has been shattered, with uncertainty reigning ahead of the high-stakes meeting.

“The two largest economic powerhouses, the US and China, either will be at a trade war or a trade peace and in reality there's only a couple of people who know the answer to that and it isn't those of us on Wall Street,” said Larry Robbins, CEO of Glenview Capital Management.

Asian markets staged a minor recovery on Tuesday following the previous day's pummeling, which came in response to Trump's warning. But a blowout on Wall Street continued in Asia, with investors running for the hills.

Shanghai and Hong Kong each tanked one per cent and Tokyo shed 1.6 per cent by the break. Sydney fell 0.4 per cent, Singapore dropped 0.8 per cent and Seoul retreated 0.3 per cent, with Manila more than one per cent lower. Taipei and Jakarta also sank, while a first interest rate cut in five years was not enough to prevent Wellington dropping 0.5 per cent.

And Stephen Innes at SPI Asset Management warned there could be worse to come.

“With the possibility of the trade deal in tatters, markets could turn upside down,” he said in a note. ”Indeed, the relentless bull market seemed impervious to risk, but (that) spawned a high degree of complacency that leaves most market participants ill-prepared for the inevitable reversal.“

He added: ”While the impact of more tariffs will be harmful to both the US and China economies, it is hard to overlook the damaging effect on other economies in Asia a nd the world.”

World markets had already been showing signs of fatigue from their run this year, with signs of a slowdown in the world economy playing on investors' minds, while central banks have turned more dovish in recent months with an eye on this.