Tokyo — Asian stocks fell on Wednesday after US legislators announced an impeachment inquiry into President Donald Trump, increasing the prospects of prolonged political uncertainty in the world’s largest economy.

The dramatic move by House of Representatives Democrats compounded investors’ anxieties with confidence already shaken by new worries about US-China trade negotiations.

MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.82%, Japan’s Nikkei fell 0.63%, while Australian shares fell 0.60%.

Chinese shares slumped and oil futures extended declines after Trump harshly criticised Beijing’s trade practices in a speech at the UN, damping hopes for a resolution to the US-China trade war.

The dollar nursed losses against most currencies as the inquiry sets the stage for a fierce battle between Democrats and Trump’s Republican Party over whether the president sought foreign influence to smear a political rival.

“The impeachment probe has put a dent in Asian shares,” said Kiyoshi Ishigane, chief fund manager at Mitsubishi UFJ Kokusai Asset Management in Tokyo.

“Chinese shares were already exposed to downside risks. Trump’s comments likely increased those risks. There are worries about US consumer sentiment. There are also concerns that China’s economic slowdown hasn’t stopped.”

US stock futures rose 0.06% in Asia on Wednesday, but the mild gains are unlikely to improve sentiment for Asian shares.

The impeachment push and disappointing US economic data weighed on Wall Street on Tuesday, pushing the S&P 500 0.84% lower, its biggest daily decline in a month.

The US House of Representatives will launch a formal impeachment inquiry over whether Trump sought help from the Ukraine to smear former vice-president Joe Biden, a front-runner for the 2020 Democratic presidential nomination. Trump has denied the claims.

It is unlikely that the impeachment inquiry would lead to Trump’s removal from office. Even if the Democratic-controlled house voted to impeach Trump, the Republican-majority Senate would have to take the next step of removing him from office after a trial.

However, the development injects fresh uncertainty into financial markets, which have already been jostled by emerging global political risks in recent years.

“If an impeachment inquiry looks like ending his re-election chances in 2020, he may throw caution to the wind and harden his attitude to a China trade deal, increasing the chances of a global recession in 2020,” said Jeffrey Halley, senior market analyst at OANDA.

The dollar index measuring the greenback against a basket of six currencies was little changed after falling 0.3% on Tuesday.

Chinese shares fell 0.79% while shares in Hong Kong skidded by 1.23%.

Trump said on Tuesday Beijing had failed to keep promises it made when China joined the World Trade Organisation in 2001 and was engaging in predatory practices that had cost millions of jobs in the US and other countries.

US crude dipped 0.75% to $56.86 a barrel. Brent crude fell 0.86% to $62.55 a barrel.

The US-China trade war, which has dragged on for more than a year, has added pressure on China’s already slowing economy and has increased the risk of recession in other countries. Slower global growth would hurt demand for energy and other commodities.

Sterling traded at $1.2473, down 0.2%, having trimmed about of its overnight gains made after the UK court ruling.

In response to the UK supreme court’s decision, Johnson said he disagreed and vowed that Britain would leave the EU by the October 31 deadline, come what may.

Calls for Johnson’s resignation could grow, which would cast even more uncertainty over how the UK would complete its divorce from the EU.

The yield on benchmark 10-year Treasury notes rose to 1.6352%, while the two-year yield rose to 1.6096%.