Asian stock markets are expected to face declines on Thursday after President Donald Trump's recent trade actions dampened investor appetite for riskier assets. Australian shares dropped, while futures for Japanese and Hong Kong equities indicated early losses. US stock futures also fell in early Asian trading, following a decline in both the S&P 500 and Nasdaq 100 on Wednesday. Trump signed an order imposing a 25% tariff on all cars not produced in the US effective from April 2, but mentioned that reciprocal tariffs to be announced next week will be relatively mild. He also hinted at a potential tariff reduction for China in exchange for a deal on the sale of TikTok to an American company.

The uncertainty surrounding US trade policies towards its allies and adversaries has heightened market volatility, as investors rush to assess the impact on global trade and economic growth. This uncertainty could trigger a renewed sell-off in Asian markets, although Chinese tech firms might benefit from a shift away from US tech giants.

US stocks experienced a decline on Wednesday, with the S&P 500 and Nasdaq 100 both falling significantly. Concerns about the economic repercussions of the ongoing trade disputes are impacting liquidity in US equities, which poses challenges for institutional investors and could increase market volatility. Liquidity in S&P 500 stock-index futures is currently at a two-year low, indicating a potential rise in market uncertainty.