Asian shares ease as trade war fears return

SYDNEY (Reuters) – Asian shares reversed early gains on Tuesday as anxieties about the Sino-US trade war recast their long shadow over investor sentiment, while several high-profile resignations from Britain’s government kept sterling on the defensive.

MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.1 percent after earlier rising more than 0.5 percent. The index had gained 1.3 percent on Monday.

The losses were led by China, with Shanghai blue chips off 0.4 percent. The index added 2.8 percent on Monday for the biggest daily jump since August 2016.

Japan’s Nikkei climbed about 0.7 percent and South Korea 0.3 percent.

Investors have been on edge recently with the US and China slapping levies on each other’s exports, spurring fears of a global growth slowdown and hurting stocks and commodities.

On Friday, both China and the US slapped tit-for-tat tariffs on $34 billion worth of each other’s goods, stirring fears of a prolonged dispute. The row has rattled Chinese financial markets, with the yuan suffering its worst monthly loss on record in June.

Despite the overhanging concerns about trade, market attention is expected to turn to other developments, at least for the near-term.

“Many investors are looking ahead to second-quarter earnings season, which begins in earnest Friday... to see how the trade threat is affecting companies,” said James McGlew, Perth-based analyst at stockbroking firm Argonaut.