Asian stock markets fell on Wednesday after US Democrats launched formal impeachment proceedings against President Donald Trump and on renewed trade fears as the president adopted a hard line on China.
In a dramatic move, House Democratic leader Nancy Pelosi announced a formal impeachment inquiry after US markets closed.
Democrats accuse Trump of abuse of power in a reported attempt to pressure the newly installed president of Ukraine to open a corruption investigation into his lead challenger for the White House, Joe Biden, and Biden’s son Hunter.
Trump denounced the inquiry as “Witch Hunt garbage” and said he would release a transcript of his phone call with Volodymyr Zelensky.
“The impeachment hearing announcement delivered a knock-out blow to stocks markets already weak at the knees,” Oanda senior market analyst Jeffrey Halley said in a note.
Concern over US political turmoil added to worries over international trade after Trump ripped into China at the UN, declaring that the time of Beijing’s “abuses” of the system was “over”.
Touting what he argued were the benefits of his tariff war with China, Trump reiterated his hope that a trade agreement “beneficial to both countries” could be struck.
“But as I said very clearly, I will not accept a bad deal for the American people,” he said.
The US political twists and Trump’s uncompromising comments ahead of Sino-US trade talks next month hit markets.
Tokyo closed down 0.4 per cent and Shanghai slipped 1.0 per cent while Hong Kong ended 1.3 per cent lower.
Seoul also fell 1.3 per cent and Taiwan gave up 0.4 per cent while Singapore was trading 1.1 per cent lower and Mumbai was down 1.2 per cent. The Cambodia Securities Exchange index inched up by 0.33 per cent.
European markets also slid at the open, with London and Frankfurt both down 0.5 per cent while Paris shed 0.6 per cent.
Oil prices took a hit, with West Texas Intermediate off 0.9 per cent and Brent down 1.1 per cent following Trump’s tough talk on China and after data indicating a build up in US crude inventories.
“Oil markets continue to sell as risk sentiment remains sour after Trump accused China of currency manipulation, theft of intellectual property and product dumping,” said Stephen Innes, Asia Pacific market strategist at AxiTrader.
“Mind you this is nothing shockingly new but coming on the cusp of trade negotiations, it doesn’t exactly suggest he’s laying down the welcome mat for the Chinese delegation.”
In currency trading, the pound slipped against the dollar. It had rallied on Tuesday following Britain’s Supreme Court ruling that Prime Minister Boris Johnson’s suspension of parliament was “unlawful”, providing a spark of hope that Brexit will be more orderly than previously feared.
“The ensuing British Pound rally was a bit underwhelming. It probably reflected the uncertainty of both Mr Johnson’s tenure and the Brexit process with October the 31st looming,” said Oanda’s Halley.