Investing.com - Asian equities were mixed in morning trade on Tuesday after the International Monetary Fund (IMF) cuts its global economic growth forecasts for 2018 and 2019.
The fund said in its updated World Economic Outlook that it was now expecting growth of 3.7%, down from the 3.9% growth it forecast in July. It was the first downgrade since July 2016.
Worsening financial conditions and capital outflows were putting pressure on emerging markets, while escalating trade tension between the U.S. and its trade partners also clouded global economic outlook, the IMF said.
"U.S. growth will decline once parts of its fiscal stimulus go into reverse," IMF chief economist Maurice Obstfeld said in a statement. "Notwithstanding the present demand momentum, we have downgraded our 2019 U.S. growth forecast owing to the recently enacted tariffs on a wide range of imports from China and China’s retaliation."
The fund also reduced its growth outlook for China to 6.2% from 6.4% for the year 2019.
U.S. President Donald Trump imposed tariffs on $250 billion of Chinese imports so far this year, and Beijing retaliated with levies on $110 billion of U.S. goods.
Overnight, the Dow Jones Industrial Average rose 39.73 points, the Nasdaq Composite slipped by 0.7% while the S&P 500 closed largely unchanged at 2,884.43.
In Asia, Japan’s Nikkei 225 traded 1.3% lower by 9:40PM ET (01:40 GMT) as traders returned after a long weekend. A stronger yen was cited as headwind for local equities.
China’s Shanghai Composite and the Shenzhen Component both rose 0.6%, while the Hong Kong’s Hang Seng Index inched up 0.4%.
On Monday, Chinese Foreign Minister and State Councillor Wang Yi accused the U.S. of “constantly escalating trade friction toward China," and making "groundless criticism of China's domestic and foreign policies”in a meeting with U.S. Secretary of State Mike Pompeo.
Pompeo responded by saying: "The issues that you have characterized, we have a fundamental disagreement."
Down under, Australia’s ASX 200 also slipped 0.8%.
South Korea’s KOSPI is closed for a holiday.