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Asian Stocks Slip as U.S.-China Trade Tensions Rise; Japan and China Lead Losses

Asian Stocks Slip as U.S.-China Trade Tensions Rise; Japan and China Lead Losses. Source: Image by Gerd Altmann from Pixabay

Asian stock markets extended losses on Thursday, led by steep declines in Japan and China, after reports surfaced that the United States may tighten export restrictions on China. The renewed trade tension between the world’s two largest economies weighed heavily on investor sentiment across the region.

A Reuters report revealed that Washington is considering curbing software-powered exports to China, including laptops, jet engines, and advanced technology products. The potential move, reportedly still under discussion, is seen as leverage against Beijing’s recent rare earth export restrictions. The development comes ahead of a possible meeting between U.S. President Donald Trump and Chinese President Xi Jinping, highlighting the fragile state of U.S.-China relations.

The news triggered declines across major Asian indices. China’s Shanghai Shenzhen CSI 300 dropped 0.6%, and the Shanghai Composite fell 0.7%, while Hong Kong’s Hang Seng was flat, dragged by a 0.8% fall in the Hang Seng TECH Index.

Japan’s Nikkei 225 fell 1.3%, extending its pullback after a record-breaking rally earlier this week. The broader TOPIX shed 0.5% as investors booked profits amid uncertainty over Prime Minister Sanae Takaichi’s upcoming economic stimulus package. The new plan, expected to exceed last year’s 13.9 trillion yen program, aims to tackle inflation and support household spending.

In contrast, South Korea’s KOSPI index rose 0.3% to a new record high of 3,895.09 after the Bank of Korea kept its key interest rate steady at 2.5% for the third consecutive meeting. The decision underscored the central bank’s focus on economic stability, with analysts forecasting a potential rate cut in November.

Elsewhere, Australia’s S&P/ASX 200 and Singapore’s Straits Times Index traded flat, while India’s Nifty 50 futures edged slightly lower. Investors now await key U.S. inflation data ahead of next week’s Federal Reserve policy meeting, where a rate cut is widely anticipated.

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