Stocks in Asia were set to trade lower on Wednesday amid mounting uncertainty on the U.S.-China trade front ahead of expected high level negotiations between the two economic powerhouses later this week.
Futures pointed to a lower open for Japanese shares. The Nikkei futures contract was at 21,355 and its counterpart in Osaka was at 21,340. That compared against the Nikkei 225's last close at 21,587.78.
In Australia, the S&P/ASX 200 declined 0.61% in early trade
Investors will watch for market reaction to overnight developments in U.S.-China tensions. Washington expanded its trade blacklist to include some of China's top artificial intelligence firms on Monday, in response to Beijing's alleged treatment of predominantly Muslim ethnic minorities. For its part, China's Ministry of Commerce said the U.S. should "stop interfering" in the country's internal affairs and "remove" the relevant entities from the list "as soon as possible."
Those latest developments cloud the outlook for the upcoming U.S.-China trade negotiations, set to kick off on Thursday amid the looming prospect of more tariffs from Washington on goods from Beijing. The White House has scheduled an increase in U.S. tariffs on $250 billion worth of Chinese goods to 30% from 25% on Oct. 15. U.S. President Donald Trump has said the increase in duties will kick in if no progress is made in bilateral trade negotiations.
The protracted trade fight between the U.S. and China has already lasted for more than a year, with both parties slapping tariffs on billions of dollars worth of each other's goods, denting investor sentiment and raising fears over the outlook for the global economy.
Markets in South Korea are closed on Wednesday for a holiday.
Overnight on Wall Street, stocks tumbled amid the dented hopes for a U.S.-China trade deal. The Dow Jones Industrial Average plunged 313.98 points to close at 26,164.04 while the S&P 500 slipped 1.6% to end its trading day stateside 2,893.06. The Nasdaq Composite dropped 1.7% to close at 7,823.78.
The U.S. dollar index, which tracks the greenback against a basket of its peers, was last at 99.133 after touching highs around the 99.2 handle yesterday.
The Japanese yen traded at 106.96 against the dollar after strengthening from levels above 107.3 in the previous session. The Australian dollar changed hands at $0.6731 after falling from levels above $0.675 yesterday.
—CNBC's Fred Imbert contributed to this report.