Stock markets in Asia tumbled on Friday as the trade war between the US and China escalated, after President Donald Trump announced tariffs on up to $60bn in annual Chinese imports and Beijing applied its own levies on US imports.

Hong Kong’s Hang Seng index sold off 3.4 per cent in early morning trade in Asia, weighed down by technology stocks, which dropped by 6 per cent. Shares in Tencent, the world’s largest gaming company, were also sharply down, after South African media company Naspers said it would sell a $10bn stake in the group.

China’s CSI 300 index of mainland-listed stocks fell 3.1 per cent, with CSSC Offshore & Marine Engineering, a shipbuilding enterprise, down by 7.7 per cent and Future Land, a real estate company, sliding 6.4 per cent.

In Japan, the Topix index dropped 3.4 per cent, while Australia’s S&P/ASX was down by 1.9 per cent.

Mr Trump said on Thursday he would apply tariffs to Chinese goods to help redress the US’s $375bn trade deficit with China, sending the S&P 500 down by 2.5 per cent, its biggest one-day fall since February.

China’s Ministry of Commerce said on Friday it would impose tariffs on 128 products, representing about $3bn in US imports. The plans include a 15 per cent tariff on US steel pipes, fresh fruit and wine, and a 25 per cent tariff on pork and recycled aluminium, prompting fears of a trade war.

Money flowed into havens such as the yen, with the Japanese currency firming 0.6 per cent in early Asia trading on Friday to ¥104.62 against the dollar, its highest since November 2016.

“The trade war stuff is clearly spooking the Japanese market,” said a Tokyo equities broker. “The Topix is basically a barometer for global risk-on, risk-off appetite and is always going to bear the brunt for a big global set of concerns like we have today.”

Another facto was the risk of Japan-specific issues, he added. “There is a worry [that] Japan cannot avoid the crossfire of a US-China trade war.”

The prospect of trade tariffs helped to drive US stocks to their worst fall in more than a month on Thursday, capping a series of developments that heightened investors’ uncertainty about the business and political climate.

US benchmarks fell the most since February 8, with the S&P 500 dropping 2.5 per cent and slipping into the red for the year. Bonds rose, with the yield on the 10-year Treasury falling 6 basis points to 2.82 per cent. The Cboe Vix volatility index jumped back above its long-term average of 20 for the first time in more than a month.

The Trump administration’s tariff plans have stoked fears of heightened inflationary pressure and curtailed growth.

“Cyclical sectors are getting beaten up,” said Brian Nick, chief investment strategist at Nuveen. “There’s a sense this will hurt growth in China and the US. These are the sectors that would be more hurt if you had an end to the era of friendly trade.”

Boeing and Caterpillar, large industrial groups with extensive parts of their supply chain in China, were both down more than 5 per cent, and among the day’s laggards.

It seems like we’re much closer to the end of the growth cycle than the beginning, and there is much more jitteriness

The trade news hit as investors were still digesting Jay Powell’s first policymaking meeting as chairman of the Federal Reserve. While he was generally judged as competent, opinions diverged on whether the overall message was dovish or hawkish.

“It’s just a toxic cocktail of events,” said Rich Bernstein of Richard Bernstein Advisors. “There was very little good news to offset the bad news, and the bad news happened to be quite bad.”

He added that the market had been assuaged by the Trump administration’s granting of steel and aluminium tariff exemptions to its allies. “But now it’s looking more like a true trade war,” Mr Bernstein said. “I’m astounded that for some reason we think this is beneficial economic policy. I just don’t get it.”

Erin Browne, head of global asset allocation for UBS Asset Management, described the president’s expressed wish to reduce the US trade deficit with China by $100bn immediately as “totally unrealistic”.

She added: “A lot of people were expecting that we were going to get a lot more detail on which sectors and industries might be targeted for tariffs. The markets were already fatigued from the tariff talk and now we have to wait another month for clarity. It’s the unknown that is very hard for investors to factor in.”

The volatility marked a contrast from last year, when markets easily absorbed political risks.

“Now we are past tax reform, and the Fed is raising rates and getting back to neutral,” said Mr Nick at Nuveen. “It seems like we’re much closer to the end of the growth cycle than the beginning, and there is much more jitteriness.”

Adding to the anxiety, John Dowd, a top lawyer representing Mr Trump in connection with the Russia investigation, resigned on Thursday.

“There was a confluence of events that raised investor uncertainty,” said Alan Gayle, president of Via Nova Investment Management. “This was very much a risk-off day.”

Others suggested that the tariffs announcement could have been more negative. Alec Phillips of Goldman Sachs said: “The $50bn in goods the White House has said will be targeted is roughly as expected, but the 25 per cent level of the tariff is lower than we expect”

Markets were also burdened by what was seen as an unconvincing performance by Mark Zuckerberg, the chief executive of Facebook, which was seen as raising the risk of regulation.

The fallout from allegations that Cambridge Analytica, a data analysis firm employed by Mr Trump’s presidential campaign, mined the personal data of 50m Facebook users has hit its shares and raised questions about whether tech companies that have access to similar data could be at risk.

Leo Lewis in Tokyo contributed to this article

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