Asia report: Markets finish weaker on eve of two-way tariffs

In Japan, the Nikkei 225 was down 0.78% at 21,546.99, as the yen weakened 0.16% against the dollar to last trade at JPY 110.67.

Among the worst performing sectors on the Topix - which itself fell 1.1% - were oil plays and retail stocks, with Uniqlo owner Fast Retailing down 2.52%.

All sectors on the Topix ended the day in the red.

On the mainland, the Shanghai Composite lost 0.91% to 2,733.98, and the smaller, technology-heavy Shenzhen Composite slid 2.2% to 1,528.67.

South Korea’s Kospi was 0.35% lower at 2,257.55, while the Hang Seng Index in Hong Kong slipped 0.21% to 28,182.09.

Blue-chip technology stock Samsung Electronics went with the market but against its sector peers, falling 0.65% in Seoul, while construction firms also lingered on the downside.

Market sentiment in the region had been dragged in previous sessions by concerns around the implementation of tariffs on Friday.

The US had said it would lay on punitive tariffs on $35bn worth of Chinese goods on 6 July, with China promising to retaliate with its own tariffs.

Some market watchers thought that, owing to China’s time zone being significantly ahead of Washington’s, Beijing would effect its tariffs first, although officials in Beijing said that they “absolutely will not fire the first shot”.

Mizuho Bank foreign exchange strategist Weiliang Chang said uncertainty over how the tariffs would affect trade was what was weighing on sentiment.

“Markets are not pricing in just the first tranche, but increased risks of an escalation to broad-based tariffs across the entire merchandise goods space,” Chang noted.

“The fear is that Trump has threatened to retaliate against China's retaliatory tariffs, and it could be more than a bluff to coerce.”

Oil prices were higher, with Brent crude last up 0.08% at $78.30 per barrel, and West Texas Intermediate adding 0.44% to $74.66.

In Australia, the S&P/ASX 200 managed to add 0.52% to close at 6,215.50, as the hefty financials subindex managed a rise of 1%.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 also notched gains, rising 0.4% in light trading to settle at 9,062.85.

Both of the down under dollars were stronger on the greenback, with the Aussie last ahead 0.25% at AUD 1.3511, and the Kiwi advancing 0.4% to NZD 1.4730.