Asian Markets Suffer Steep Losses Amid Escalating US-China Trade War

A trader works on the floor at the New York Stock Exchange

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But the blue-chip index recouped most of its losses to end down a more modest 22.45 points, or 0.1 percent, at 26,007.07. The Nasdaq composite gained 107.23 points, or 1.4%, to 7,833.27. The Russell 2000 index of smaller companies lost 1.40 points, or 0.1%, to 1,500.69.

The dimming expectations for global growth also send the price of crude oil sharply lower.

However, stocks began to stage a rebound on Tuesday after China's central bank made it clear that it wanted its currency to trade at a higher-than-expected level to the USA dollar, easing tensions about the nation using its currency as a weapon in the trade war.

Trade concerns remerged after President Donald Trump last week threatened to slap 10% levies on the rest of $300 billion of Chinese imports and called China a currency manipulator on Monday.

That offered some hope that the sides might try to keep the situation from escalating further.

"Emerging markets got some breathing room and rebounded", said Edward Moya, senior market analyst at OANDA.

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Tuesday's sell-offs in Asia came hours after Wall Street posted its worst losses of the year, with the S&P 500 index losing three percent on Monday, while the tech-heavy Nasdaq dropped 3.5 percent and Dow Jones losing almost three percent.

Hong Kong fell 0.7 percent despite inching up at the open, while Tokyo shed 0.8 percent amid safe-haven purchasing of the yen.

Bank of America fell 3.6%.

CVS Health Corp rose 6.03 percent after the drugstore chain posted profit above estimates, boosted by strong sales in the Aetna health insurance business it acquired previous year.

Japanese stocks also showed a recovery.

Spot gold rose 1.4 percent to trade at $1,460.11 (£1201.67) per ounce at around 8:15 am ET (1.15pm BST) which marked its highest level since May 2013. The price of oil slumped nearly 5%.

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Several U.S. industry associations have voiced their opposition to the White House plan to impose more tariffs, arguing that such action will not facilitate negotiation but only hurt Americans. It fell $1.06 to $53.63 a barrel on Tuesday.

Payments processor Mastercard Inc gained 2.1% after it said it would buy a majority of the corporate services businesses of Scandinavian payments group Nets for about $3.19 billion.

DRIVING GROWTH: Take-Two Interactive Software jumped 10% on a surge in sales of "Grand Theft Auto" and other popular video games. JPMorgan Chase fell 2.2%. Novartis is the parent company of AveXis, which makes the drug. That helped pull energy sector stocks lower.

A three-month Treasury was yielding 0.36 percentage points more than a 10-year Treasury as of Wednesday afternoon. Brent crude fell $2.71 to $56.23 a barrel. Natural gas rose 4 cents to $2.11 per 1,000 cubic feet.

The sell-off began Monday in Asia, where indexes lost more than 1%, and intensified as it swept westward through Europe to the Americas.

According to Reuters the last time the Chinese currency breached the 7 level against the dollar was during the global financial crisis in 2008 - indicating the level of fear and lack of confidence in the current market.

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