A new China-US flare-up sent markets tumbling Friday, while the mood was also soured by US lawmakers' struggles to agree on a new economic stimulus—all against a backdrop of surging virus infections.
China-US tensions were back on traders' minds after US President Donald Trump signed an executive order barring US residents from doing any business with the Chinese parent companies of social media platforms TikTok and WeChat, citing national security concerns.
The move, which comes into force in 45 days, is the latest salvo in a tech stand-off between the superpowers and adds to a laundry list of issues they have butted heads over in recent months, including Hong Kong, Huawei and the coronavirus.
WeChat parent Tencent sank 10 percent at one point in Hong Kong, while the city's Hang Seng Index dropped. The yuan also took a hit against the dollar.
"The US government is expected to follow up with more measures targeting Tencent," Steven Leung, at UOB Kay Hian (Hong Kong), said.
"Tencent's overseas expansion map now looks a bit uncertain, since some M&A deals, especially if its targets are based in the US, will face challenges."
The move rippled around Asian markets, with investors concerned about increasingly bitter relations between the economic titans that some fear could lead to a renewal of their painful trade war.
The news also overshadowed data showing a surprise jump in Chinese exports for July.
Hong Kong and Shanghai dropped more than one percent, while Tokyo finished 0.4 percent lower.
Wellington and Jakarta gave up one percent, while Sydney, Mumbai, Taipei, Singapore, Manila and Bangkok were also in the red.
"Apart from the obvious fallout to Tencent and ByteDance, Washington DC's moves are sure to ratchet up geopolitical tensions with Beijing once again," said OANDA's Jeffrey Halley.
Meanwhile, a group of regulators working for Trump suggested stock exchanges impose stricter rules on firms to open up their audit papers to US accountants, which could lead to the delisting of Chinese companies.
Capitol Hill wrangling
In Washington, the bipartisanship that passed a multi-trillion-dollar rescue package earlier this year has given way to the familiar Capitol Hill wrangling as Democrats and Republicans refuse to budge on key issues.
With the Democrats' $3.5 trillion proposal more than three times the size of the Republicans' offer, a deal appears a distant hope, despite a Friday deadline.
"There are a lot of issues we are close to a compromise position on," Treasury Secretary Steven Mnuchin said after holding talks with House Speaker Nancy Pelosi and Senate Democratic leader Chuck Schumer.
However, he added they were "very, very far apart on some significant issues."
The sentiments were shared by Pelosi, who described the situation as "most unfortunate".
While there is a broad expectation among traders and analysts that a deal will eventually be struck -- particularly three months before an election -- concerns remain.
"In an election year, it is crazy to think that politicians will take a fabulously frugal approach as penniless parenting is rampant across the nation given the services sector beatdown and loss of jobs" because of the virus, said AxiCorp's Stephen Innes.
Trump has said if an agreement is not found, he will pass an executive order covering a payroll tax cut, eviction protections, unemployment benefits and student loan repayments.
The battle in Congress comes as the US reported more than 2,000 deaths from the disease Thursday -- the first time it has done so in three months.
The next point of focus is the US jobs report due Friday, which will provide a clearer idea about the impact of the virus on the economy after a number of states reimposed lockdown measures to fight a fresh infection spike.
While figures Thursday showed new applications for jobless benefits began to fall again last week, the 1.2 million figure showed the economy is still struggling.
Key figures around 0600 GMT
Tokyo - Nikkei 225: DOWN 0.4 percent at 22,329.94 (close)
Hong Kong - Hang Seng: DOWN 1.7 percent at 24,500.76
Shanghai - Composite: DOWN 1.3 percent at 3,341.60
Euro/dollar: DOWN at $1.1845 from $1.1884 at 2100 GMT
Dollar/yen: UP at 105.54 yen from 105.52 yen
Pound/dollar: DOWN at $1.3128 from $1.3145
Euro/pound: UP at 90.21 pence from 90.34 pence
West Texas Intermediate: DOWN 0.2 percent at $41.88 per barrel
Brent North Sea crude: DOWN 0.1 percent at $45.05 a barrel
New York - Dow: UP 0.7 percent at 27,386.98 (close)
London - FTSE 100: DOWN 1.3 percent at 6,026.94 (close)
COMMENT DISCLAIMER: Reader comments posted on this Web site are not in any way endorsed by Manila Standard. Comments are views by manilastandard.net readers who exercise their right to free expression and they do not necessarily represent or reflect the position or viewpoint of manilastandard.net. While reserving this publication’s right to delete comments that are deemed offensive, indecent or inconsistent with Manila Standard editorial standards, Manila Standard may not be held liable for any false information posted by readers in this comments section.