Asia stocks slip, bonds rally on fear China-US trade deal could unravel

TOKYO: Asian equities tracked Wall Street's slide on Wednesday, while investors switched to safe-haven government bonds, driven by fears that global growth will suffer as a potential trade deal between the United States and China appeared to be unraveling.

The index had climbed to a nine-month peak three weeks ago, buoyed by factors including strong Chinese economic data and views that Sino-U.S. trade negotiations were progressing and would end in a deal.Australian stocks declined 0.4 percent, South Korea's KOSPI fell 0.3 percent and Japan's Nikkei was down 1.9 percent.

Global stocks had a rocky start to the week after Washington on Monday accused Beijing of backtracking from commitments made during trade negotiations. That followed President Donald Trump's unexpected statement on Sunday that he would raise tariffs on US$200 billion worth of Chinese goods to 25 percent from 10 percent."From an equity market perspective, the immediate focus is on the two-day talks scheduled to take place between the U.S.

Benchmark 10-year yields on U.S. Treasuries, German bunds and Japanese government bonds sank to one-month lows. The Japanese yen, a perceived safe-haven, often gains against its peers in times of market turmoil and political strife. The Aussie was on the front foot after the Reserve Bank of Australia kept its policy interest rate unchanged at 1.5 percent on Tuesday, defying expectations for a cut.

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