Asia markets broadly fell on Wednesday as the MSCI Asia ex-Japan index touched 14-month lows, on the back of news that China will be making a request to the World Trade Organization to impose sanctions on the U.S.
In Australia, the ASX 200 closed slightly lower at 0.06 percent, as the financial sector slipped by 0.39 percent.
Markets on the mainland also continued the downward trend for the day, with the Shanghai composite closing 0.33 percent lower at around 2,656.11 while the Shenzhen composite shed 0.407 percent to end the trading day at approximately 1,403.60.
The broad MSCI Asia ex-Japan index was trading lower by 0.26 percent at 506.36 as of 3:40 p.m. HK/SIN. The index had earlier touched its lowest point since July 2017.
Overnight on Wall Street, the Dow Jones Industrial Average ended the trading day around 114 points higher to close at 25,971.06. The Nasdaq Composite was up by 0.61 percent to close at about 7,972.47 while the S&P 500 advanced by approximately 0.37 percent to end the day at 2,887.89.
On Tuesday, it was revealed that China will approach the WTO next week to request for permission to impose sanctions on the U.S. The meeting, which is scheduled to take place on Sept. 21, comes amid an escalation of tensions between the two economic powerhouses on trade issues.
The U.S. dollar index, which tracks the greenback against a basket of currencies, was at 95.203 as of 3:04 p.m. HK/SIN, after earlier trading between 95.1 and 95.2 for much of the morning of Asian trade.
Overnight in the oil markets, prices climbed on the back of the impending U.S. sanctions on Iran in November and a lowering of forecasts to reflect expectations of slower growth in crude production stateside in 2019.
In afternoon trade, oil prices remained higher despite losing some of their earlier gains. The global benchmark Brent crude futures was up by 0.39 percent at $79.36 per barrel, while U.S. crude futures saw gains of 0.82 percent at $69.82 per barrel as the U.S. east coast braced for a major hurricane.
Hurricane Florence, a Category 4 storm barreling toward North Carolina and South Carolina, is expected to make landfall on Friday.
The recent developments in global trade and oil markets have led some investors to urge caution over emerging market currencies, some of which reached 20-year lows recently.
"The perfect storm appears to be building for emerging markets currencies with some pairs sitting at very vulnerable levels having already broken to historic lows," according to a morning note by Rakuten Securities Australia.
"We're seeing a strong US economy push (Federal Reserve) rate hike expectations higher at the same time as (its) international policy puts pressure on global trade," it said. "Once you throw a rising Oil price into the equation when many of these economies are importers, then the stage is set for some potentially nasty moves."
— Reuters contributed to this report.