SYDNEY, May 23 ― Asian shares were stuck in the red today amid worries the Sino-US trade conflict was fast morphing into a technology cold war between the world's two largest economies.

Late yesterday, Reuters reported the US administration was considering Huawei-like sanctions on Chinese video surveillance firm Hikvision over the country's treatment of its Uighur Muslim minority, according to a person briefed on the matter.

After the United States placed Huawei Technologies on a trade blacklist last week, British chip designer ARM has halted relations with Huawei in order to comply with the blockade.

“For China, the key risk is that the combined effects of investment restrictions, export controls, and tariffs will rewire supply chains and weaken manufacturing investment, particularly in the technology sectors driving growth,” ratings agency S&P warned in a special report.

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Japan's Nikkei slipped 0.5 per cent in early trade, while South Korea lost 0.3 per cent.

MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.01 per cent to hover just above a 16-week trough. E-Mini futures for the S&P 500 edged down 0.17 per cent.

Minutes of the US Federal Reserve's last meeting out yesterday underlined its readiness to be patient on policy “for some time” given the uncertain global outlook.

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The chance of a rate cut seemed to diminish as many Fed policy makers saw recent weakness in inflation as “transitory”, though the latest escalation in the trade war means markets are still wagering on an eventual easing.

Yields on two-year Treasuries of 2.237% are also well below the current effective funds rate at 2.39 per cent.

There remains no end in sight to the trade dispute. Treasury Secretary Steven Mnuchin on Wednesday said it would be at least a month before the US would enact proposed tariffs on US$300 billion (RM1.25 trillion) in Chinese imports as it studies the impact on American consumers.

The mood on Wall Street was cautious with the Dow ending Wednesday down 0.39 per cent, while the S&P 500 lost 0.28 per cent and the Nasdaq 0.45 per cent. Shares in chipmaker Qualcomm Inc dived 10.9 per cent after a federal judge ruled the company illegally suppressed competition in the market for smartphone chips by threatening to cut off supplies and extracting excessive licensing fees.

More Brexit chaos

In currencies, constant trade friction saw the safe haven yen in demand again as the dollar dipped to ¥110.22 and away from the week's top of 110.67.

The dollar fared better on the euro at US$1.1155 and was steady on a basket of currencies at 98.075.

Sterling was the main mover, sliding to a four-month low at US$1.2625 before steadying at US$1.2660 in Asia.

British Prime Minister Theresa May came under intense pressure after her latest Brexit gambit backfired and fuelled calls for her to quit.

Prominent Brexit supporter Andrea Leadsom resigned from the government yesterday and British media reported May could announce her departure date as early as tomorrow.

Uncertainty is the only clear certainty in the near term,” said Westpac macro strategist Tim Riddell.

“The risk of a hard-Brexit replacement for May has increased the risks of a hard Brexit result or even a forced no-deal exit,” he added “Such an event would likely force GBP lower, increase risks of assets sliding and BoE taking counter action to support assets.”

In commodity markets, spot gold edged up a touch to US$1,274.25 per ounce.

Oil prices were consolidating after falling around 2 per cent overnight as an unexpected build in US crude inventories compounded investor worries about demand.

US crude was last down 8 cents at US$61.34 a barrel, while Brent crude futures lost 12 cents to US$70.87. ― Reuters