Hong Kong: Asian markets sank on Wednesday, starting the new year by extending a slide that made 2018 the worst in a decade, with investors jolted by data reinforcing weakness in China's economy.
With a number of potential banana skins dotting the next 12 months - including the China-US trade row and Brexit - dealers are keeping to the sidelines as they look for signs of stability.
Hong Kong led the losses, tumbling more than 2 per cent, while Shanghai shed 1 per cent after two indicators showed Chinese manufacturing activity shrank in December.
The readings, from the government and another a private survey, are the latest to highlight problems in the world's number two economy following a slew of downbeat figures including on trade, factory output and inflation.
"The disappointment that came through in December has transferred into January as well," Jingyi Pan, a market strategist at IG Asia, told Bloomberg News.
She added that the reading was a reminder of the US-China trade tensions and "brings back to the surface worries on growth".
There were also market losses in Sydney, which dropped 0.7 per cent, while Seoul shed one percent and Singapore slipped 0.9 per cent. Taipei and Jakarta also fell. Tokyo and Wellington were closed for public holidays.
Trump deal call
Investors were also spooked by the ongoing US government shutdown, which is now in its second week.
Donald Trump on Tuesday invited leaders from both parties to talks to end the standoff but with Democrats refusing to pass any budget that would fund the president's Mexican border wall there is little optimism a deal can be made.
For their part, Democrats, who take over the House of Representatives on Thursday, have lined up spending bills without addressing the wall.
Trump appeared to strike a more conciliatory tone on Twitter by reaching out to Nancy Pelosi, who is set to become House Speaker again.
"Border Security and the Wall 'thing' and Shutdown is not where Nancy Pelosi wanted to start her tenure as Speaker! Let's make a deal?" he tweeted.
Also on the radar are trade talks between China and the US, which are set to begin this month, with Trump hailing "big progress" on the issue at the weekend. The president and his Chinese counterpart Xi Jinping agreed last month to a 90-day halt in their painful tariffs spat so they could resolve their differences.
Immediate attention is now on the release Friday of US jobs data, which could provide fresh evidence of the state of the world's top economy.
A strong reading would put pressure on the Federal Reserve to continue to lift interest rates, a negative for stock markets, which were battered last year partly by concerns about the rising cost of borrowing.