Asian markets were down yesterday as trade tensions between the US and China weighed on investor sentiment ahead of new tariffs kicking in, reports AFP from Honk Kong.

Wall Street ended the session down in a shortened trading day ahead of Wednesday’s Independence Day holiday, with falls in tech stocks pressuring the market.

Concerns remain for Shanghai, which is down more than 20 per cent from its January high on concerns about a slowing economy, even before new US tariffs threatened by Donald Trump kick in Friday.

China’s yuan is also under pressure, though it levelled after a rally on comments from central bank chief Yi Gang, who pledged to keep the exchange rate stable and avoid using the currency as a weapon in any trade war.

The unit has fallen around eight per cent since the end of March, adding to fears about the economy as leaders struggle to cap massive debt while supporting growth.

Despite the central bank’s reassurances, “the markets remain very bearish on China... well over and above trade tensions, as waning growth momentum has contributed to diverging economic indicators versus the US,” said Stephen Innes, head of Asia-Pacific trade at OANDA.

“Unless there’s compromise in the trade dispute, the yuan should remain under pressure,” he added.

But there is little sign of an easing in the standoff between Beijing and Washington, with a Chinese court decision to temporarily ban chip sales by US tech company Micron Technology further souring the atmosphere.

While the case was primarily a dispute between Micron and a Taiwanese firm, the ruling comes after the US blocked China Mobile from the US market.

The move fuelled “speculation the decisions were part of the tit-for-tat trade war,” wrote David de Garis, director of economics and markets at National Australia Bank.

In share trading, Hong Kong closed down 1.1 percent, extending a Tuesday sell-off that saw the market fall more than three per cent at one point.

The benchmark Shanghai Composite Index also finished down 1.0 percent, with while Tokyo’s Nikkei was off 0.3 percent.

Tokyo traders were cautious about the trend in Chinese stocks but “with the prospects that the yuan’s depreciation is bottoming out... buying back supported the Japanese market later,” Okasan Online Securities strategist Yoshihiro Ito said in a commentary.

Zhang Gang, analyst at Cental China Securities warned that investors remain “worried that the US-China trade tensions could further escalate.”

“The market may not easily rebound before July 6th when things may become clearer.”

Oil prices diverged, after earlier climbing on a tightening US market along with potential US sanction actions against major producer Iran.

Saudi Arabia has said it is prepared to boost supply to balance the market, but traders are also weighing factors ranging from a disrup