SYDNEY: Asian shares carved out a four-month trough on Thursday amid worries the Sino-US trade conflict was fast morphing into a technology cold war between the world's two largest economies.
Late Wednesday, Reuters reported the US administration was considering Huawei-like sanctions on Chinese video surveillance firm Hikvision over the country's treatment of its Uighur Muslim minority, according to a person briefed on the matter.
After the United States placed Huawei Technologies on a trade blacklist last week, British chip designer ARM has halted relations with Huawei in order to comply with the blockade.
"For China, the key risk is that the combined effects of investment restrictions, export controls, and tariffs will rewire supply chains and weaken manufacturing investment, particularly in the technology sectors driving growth," ratings agency S&P warned in a special report.
Shanghai blue chips shed 1.5 per cent in response to be near their lowest since February. MSCI's broadest index of Asia-Pacific shares outside Japan slid 0.9 per cent to reach its lowest in four months.
Japan's Nikkei lost 1 per cent, while South Korea shed 0.7 per cent. Also feeling the pain, E-Mini futures for the S&P 500 dropped 0.5 per cent.
Minutes of the US Federal Reserve's last meeting out on Wednesday underlined its readiness to be patient on policy "for some time" given the uncertain global outlook.
The chance of a rate cut seemed to diminish as many Fed policy makers saw recent weakness in inflation as "transitory", though the latest escalation in the trade war means markets are still wagering on an eventual easing.
Yields on two-year Treasuries of 2.237 per cent are also well below the current effective f ..
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