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By Rae Wee
SINGAPORE (Reuters) -Shares struggled for direction on Wednesday and oil prices slid as relief over a potential easing of global trade tensions was upset by a worsening economic outlook and signs corporates were feeling the pain from Donald Trump's tariffs.
Nasdaq futures were down 0.67% in Asia, while S&P 500 futures fell 0.5%. EUROSTOXX 50 futures slipped 0.06%.
In China, data showed factory activity contracted at the fastest pace in 16 months in April, as hefty U.S. tariffs snapped two months of recovery and kept alive calls for further stimulus from Beijing.
"The hit from sky-high U.S. tariffs meant the new export orders index dropped back to its lowest level, COVID-19 disruptions aside, since August 2012," said Zichun Huang, a China economist at Capital Economics.
"The sharp drop in the PMIs likely overstates the impact of tariffs due to negative sentiment effects, but it still suggests that China’s economy is coming under pressure as external demand cools."
The dismal figures hobbled a rise in Chinese shares, with the CSI300 blue-chip index reversing earlier gains to last trade 0.07% lower. Hong Kong's Hang Seng Index ticked up 0.1%.
Despite Trump's move to soften the blow of his auto tariffs and signs of progress in broader trade negotiations, details remain scant, with Commerce Secretary Howard Lutnick saying he had reached one deal with a foreign power.
Adding to the tariff anxiety, investors were also grappling with deteriorating U.S. data as Trump's hefty tariffs rippled across businesses and consumers at home.
"We raise the probability of a prolonged economic stagnation in the coming months, meeting the criteria for a recession, to 50%," said David Kohl, chief economist at Julius Baer.
"The rising probability of economic stagnation in the U.S. is entirely due to the exogenous forces of an erratic and restrictive economic policy with arbitrary tariffs, disruptions to public spending, changing incentives, and an unsustainable fiscal stance."
Oil prices extended their steep losses from the previous session on worries about global growth and its impact on demand.
Brent crude futures were down 1.17% to $63.50 a barrel, having tumbled 2.4% overnight. U.S. crude lost 1.36% to fetch $59.60 per barrel. [O/R]
Data on Tuesday showed the U.S. trade deficit in goods widened to a record high in March as businesses stockpiled ahead of Trump's tariffs, suggesting trade was a large drag on economic growth in the first quarter. First quarter GDP data is due later in the day.