By Swati Pandey
SYDNEY (Reuters) – Asian stocks extended a global selloff and the yen rose on Tuesday as investors fled for safety as an escalating trade spat between the United States and China and a renewed slump in tech shares such as Amazon.com sapped investor confidence.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.28 percent pressured by the tech sector.
Japan’s Nikkei slipped 1.1 percent while South Korea’s KOSPI index skidded about 1 percent with Samsung Electronics down more than 1 percent. Australian shares were off 0.3 percent.
The losses in tech shares came after U.S. President Donald Trump attacked Amazon.com over the pricing of its deliveries through the United States Postal Service and promised unspecified changes.
Investors were also on the backfoot as China imposed extra tariffs on 128 U.S. products, deepening a dispute between the world’s two biggest economies and stoking concerns about the impact on global growth.
Fears of a full blown trade war became a clear focus in a U.S. manufacturing activity report for March which showed new orders index at its lowest since August.
“The China tariffs didn’t seem too bad but combined with editorials in the state press they do suggest China is ready to escalate if negotiations fail,” said Greg McKenna, chief market strategist at AxiTrader.
“And of course, the U.S. President’s tweets about Amazon just added fuel to the fire started by a recognition maybe the ‘FANGS’, and thus the overall market, had got ahead of themselves.”
So called FANG stocks – Facebook, Amazon, Netflix and Google – have been largely responsible for a multi-year bull run in world shares, although the threat of government regulation has raised worries about their outlook.
Facebook, Apple and some of their peers had a woeful last quarter as investors reassessed the high U.S. stock valuations in light of the cocktail of negative factors.
The tech-heavy Nasdaq declined 2.4 percent on Monday, wiping out all of its gains this year while the S&P 500 crashed through its 200-day moving average, a closely watched technical indicator.
China’s tit-for-tat tariffs also hurt the U.S. dollar which fell for a fourth straight day against the Japanese yen.
The dollar index was stable around recent ranges against a basket of currencies.
U.S. Treasury prices rose, with yields on benchmark 10-year notes near the lowest since early February.
Oil prices were left licking their wounds after falling more than 3.7 percent on Monday weighed by higher Russian output, the escalating U.S.-China trade dispute and expectations Saudi Arabia will cut prices of crude.
Brent crude inched 14 cents higher to $ 67.78 a barrel. U.S. crude rose 13 cents to $63.14.
Gold, which is often seen as a store of value during times of financial or political uncertainty, rose.
Spot gold ticked up to $1,341.38.
(Editing by Shri Navaratnam)