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Asian Markets Fall; Hang Seng Index Leads Losses as Tensions in Hong Kong Remain - Asian equities fell in morning trade on Friday, with Hong Kong stocks leading losses among major markets as tensions in the city remain.

The Hang Seng Index slumped 2% by 10:30 PM ET (02:30 GMT) as tensions over Hong Kong escalated. The city has been rocked by months of political unrest that was sparked by a since-withdrawn extradition bill.

U.S. President Donald Trump signed two bills that supports anti-government protestors in Hong Kong.

China condemned the action and warned the U.S. that it would take "firm counter measures". and said attempts to interfere in the Chinese-ruled city were “doomed to fail.”

Traders continued to evaluate the impact of the signing of bills. While Trump and his Chinese counterpart Xi Jinping both expressed a desire to sign n a “phase one” trade deal, reports suggested that the signing might not happen before the end of this year.

The next batch of American tariffs on Chinese goods are due to begin on Dec. 15.

Holger Schmieding, chief economist at Berenberg, told CNBC in an interview today that Hong Kong is the “biggest geopolitical risk out there for markets” at the moment.

“If the situation in Hong Kong escalates badly, if we get a Chinese heavy-handed military intervention, then it would be nearly impossible for the U.S. to conclude a trade deal with China — even a stage one deal — it would be nearly impossible for the EU to do that, so that would prolong the global industrial downturn which is caused by trade tensions,” said Schmieding.

China’s Shanghai Composite and the SZSE Component both dropped 0.6%.

Japan’s Nikkei 225 slipped 0.2%. Data showed today that the country’s industrial output fell 4.2% in October from the previous month, compared with the median market forecast for a 2.1% fall.

Another report showed that retail sales fell 7.1% during the month, its sharpest fall since 2015. A rise in nationwide sales tax to 10% from 8% that began on Oct. 1 was cited as the reason for the fall.

Meanwhile, the jobless rate came in at 2.4% in October, unchanged from last month’s figure.

South Korea’s KOSPI lost 1.2%. The Bank of Korea announced on Friday its decision to keep the benchmark interest rate steady at 1.25%, in line with expectations

Down under, Australia’s ASX 200 inched up 0.1%.

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