* Asian stock markets : https://tmsnrt.rs/2zpUAr4
* Nikkei falls 0.5%, Asia ex-Japan near 16-wk low
* Yen, sovereign bonds buoyed by safe-haven bid
* Pound under pressure on reports PM May to quit
* Oil prices nurse losses as inventories build
By Wayne Cole
SYDNEY, May 23 (Reuters) - Asian shares were stuck in the
red on Thursday amid worries the Sino-U.S. trade conflict was
fast morphing into a technology cold war between the world's two
largest economies.
Late Wednesday, Reuters reported the U.S. administration was
considering Huawei-like sanctions on Chinese video surveillance
firm Hikvision 002415.SZ 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 HWT.L 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.
Japan's Nikkei .N225 slipped 0.5% in early trade, while
South Korea .KS11 lost 0.3%.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS eased 0.01% to hover just above a 16-week
trough. E-Mini futures for the S&P 500 ESc1 edged down 0.17%.
Minutes of the U.S. Federal Reserve's last meeting out on
Wednesday underlined its readiness to be patient on policy "for
some time" given the uncertain global outlook.
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 FEDWATCH .
Yields on two-year Treasuries US2YT=RR of 2.237% are also
well below the current effective funds rate at 2.39%.
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 U.S. would enact proposed tariffs on $300
billion in Chinese imports as it studies the impact on American
consumers. The mood on Wall Street was cautious with the Dow .DJI
ending Wednesday down 0.39%, while the S&P 500 .SPX lost
0.28% and the Nasdaq .IXIC 0.45%.
Shares in chipmaker Qualcomm Inc QCOM.O dived 10.9% 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 yen JPY=
and away from the week's top of 110.67.
The dollar fared better on the euro at $1.1155 EUR= and
was steady on a basket of currencies at 98.075 .DXY .
Sterling was the main mover, sliding to a four-month low at
$1.2625 GBP= before steadying at $1.2660 in Asia. GBP/
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 on Wednesday and British media reported May could
announce her departure date as early as Friday.
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
$1,274.25 per ounce XAU= .
Oil prices were consolidating after falling around 2%
overnight as an unexpected build in U.S. crude inventories
compounded investor worries about demand. O/R
U.S. crude CLc1 was last down 8 cents at $61.34 a barrel,
while Brent crude LCOc1 futures lost 12 cents to $70.87.
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Asia-Pacific valuations https://tmsnrt.rs/2Dr2BQA
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(Editing by Shri Navaratnam)