Asia markets decline amid US-China trade jitters

Japan’s Nikkei 225 dropped 1.51% in early trade, with shares of index heavyweights such as Fast Retailing, SoftBank Group and Fanuc all seeing declines. The Topix index also fell 1.43%.

In South Korea, the Kospi declined 0.86%, with Samsung Electronics and SK Hynix shares dropping by at least 1% each.

Australia’s ASX 200 also shed 0.84%, as most sectors declined.

Overnight in the U.S., the Dow Jones Industrial Average plunged 473.39 points to close at 25,965.09 — its biggest drop since January 3. The Dow had dropped as much as 648.77 points at its low of the trading day. The S&P 500 slipped 1.65% on the day to 2,884.05 while the Nasdaq Composite declined 1.96% to close at 7,963.76.

The Cboe Volatility Index, a measure of the 30-day implied volatility of the S&P 500 known as the “VIX” or the “fear gauge,” hit a fresh high of 21.09 on Tuesday, its highest level since January 22.

U.S. Trade Representative Robert Lighthizer told reporters that the U.S. will increase levies on Chinese imports on Friday.

“It’s difficult to see how this is not going to happen,” Tim Seymour, chief investment officer at Seymour Asset Management, told CNBC’s “Squawk Box” on Wednesday. “The strategy it seems this week has changed to one where there’s political impetus … to dig in.”

Lighthizer’s comments came after U.S. President Donald Trump’s tweeted that current tariffs of 10% on $200 billion of Chinese goods would be raised to 25% on Friday. Trump also threatened to impose an extra 25% levy on another $325 billion of Chinese goods “shortly.”

The latest developments have sent markets across the globe reeling, following earlier indications that the U.S. and China could be close to ending their protracted trade war. Just last month, U.S. Treasury Secretary Steven Mnuchin told The New York Times that negotiations were in the “final laps. ”

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 97.578 after rising from levels below 97.5 yesterday.

The Japanese yen, widely viewed as a safe-haven currency, traded at 110.19 against the dollar after strengthening from levels above 110.5 in the previous session. The Australian dollar changed hands at $0.7010 from levels around $0.704 seen yesterday.

Oil prices rose in the morning of Asian trading hours, with the international benchmark Brent crude futures contract adding 0.16% to $69.99 per barrel. U.S. crude futures added 0.36% to $61.62 per barrel.

— CNBC’s Fred Imbert and Yun Li contributed to this report.