Asian markets closed lower on Wednesday following the sacking of U.S. Secretary of State Rex Tillerson and amid talk of potential U.S. tariffs against China.
The fell 0.87 percent, or 190.81 points, to finish at 21,777.29. The broader Topix slipped 0.45 percent, with most sectors trading in negative territory. Of note, the Topix iron and steel index firmed by 0.08 percent after edging lower in the last session.
Some defense-related stocks also gained ground despite broader losses on the index, with Ishikawa Seisaku, a manufacturer of defense equipment, surging 7.04 percent.
Over in Seoul, the benchmark Kospi edged down by 0.34 percent to end at 2,486.08. Automakers carved out gains that were offset by losses in other sectors, including downbeat manufacturing plays. Technology names traded mixed, with Samsung SDI gaining 2.23 percent.
Greater China markets traded lower as markets focused on a potential elevation in trade tensions. Hong Kong's tumbled 1.37 percent by 3:15 p.m. HK/SIN as the heavily weighted financials and technology sectors logged losses.
Mainland markets came under pressure despite the release of stronger-than-expected data, which saw industrial output and fixed asset investment topping forecasts. The edged down by 0.57 percent to close at 3,291.26 and the smaller Shenzhen composite lost 0.89 percent to end at 1,878.51.
Overnight news that the Trump administration was looking into a tough trade package against China likely weighed on markets. The package could include indefinite tariffs and investment restrictions. Trump could impose tariffs on $60 billion of Chinese goods, Reuters reported, citing a source.
"[T]he real danger is recalcitrant mercantilist instincts descending into trade wars," Vishnu Varathan, head of economics and strategy at Mizuho Bank, said. He added that unintended consequences could result in "unnecessary global trade pain."
In Sydney, the ASX/S&P 200 lost 0.66 percent to end at 5,935.30, with moderate gains in mining majors Rio Tinto and BHP unable to lift the broader index. Sector-wise, losses were broad-based, with all sectors except gold producers in the red. Financials, which make up the most heavily weighted sector on the index, declined 0.84 percent by the end of the day.
Tillerson out
Those losses came on the back of declines on Wall Street seen after Secretary of State Rex Tillerson was fired by U.S. President Donald Trump on Tuesday. The dollar had also taken a hit following the news.
"Global risk appetite may continue to wane on the back of U.S. President Trump's latest reshuffle to suddenly oust Tillerson," OCBC Treasury Research analysts said in a note.
"The instability of the White House staff reinforced market uncertainty about Trump's future policy moves, especially on trade."
CIA Director Mike Pompeo will be taking on the role.
"[Tillerson's] departure has left some worrying that it provides a green light to those in office pushing for more protectionist measures," said ANZ Research analysts in an early morning note.
Stocks stateside had initially traded higher early in the session after the release of inflation data. Consumer prices rose 0.2 percent last month, meeting forecasts and easing concerns about tighter monetary policy due to inflationary pressures.
Meanwhile, data released on Wednesday showed Japan core machinery orders, a volatile metric, for January rose 8.2 percent on month and 2.9 percent on year, beating forecasts, Reuters reported. The Topix machinery index was down 0.75 percent, with Komatsu lower by 1.51 percent.
In corporate news, embattled commodities firm Noble Group on Wednesday announced it had secured a binding restructuring support agreement with creditors representing 46 percent of its debt. Shares of the company were up 6.45 percent by 3:11 p.m. HK/SIN.
The dollar index, which tracks the greenback against a basket of six rivals, was mostly flat at 89.665 at 3:02 p.m. HK/SIN. The dollar eased against the yen to trade at 106.53 after trading as high as 106.74 earlier in the session.
While Bank of Japan policymakers thought it was appropriate for the central bank to "persistently pursue powerful monetary easing," some members said it was important to monitor side effects of current policy, according to minutes of the BOJ's January meeting.
The Australian dollar traded at $0.7876, firming from levels around the $0.786 handle after the release of strong China data.
— CNBC's Eamon Javers and Kevin Brueninger contributed to this report.