Asian shares fall as U.S. orders China consulate closure, fanning tensions

Asian shares fell on Thursday as the U.S.-China tensions overshadowed hopes for more economic stimulus after Washington ordered the closure of Beijing’s consulate in Houston amid spying allegations.

China called the order an “unprecedented escalation,” with sources saying that Beijing is planning to retaliate by shutting down the U.S. consulate in Wuhan.

MSCI’s broadest index of Asian shares outside of Japan fell 0.3% due to a drop in Chinese stocks. The Shanghai benchmark slid 1.67% after four days of gains.

Australian shares fell while Hong Kong’s Hang Seng index slid 0.08%. Nikkei futures lost 0.13% to 22,755 and S&P mini-futures fell 0.08%. 

Analysts say that a further escalation of the U.S.-China tensions was likely. Meanwhile, hopes for more U.S. stimulus and stronger corporate earnings supported Wall Street overnight as Democrats and Republicans continued to debate on the coronavirus relief.

The Dow Jones Industrial Average gained 0.62%, the S&P 500 rose 0.57%, and the Nasdaq Composite grew 0.24%.