Asian shares slipped to three-week lows on Friday as the release of a whistleblower complaint against US President Donald Trump added to uncertainties about the global economy, already reeling from the China-US trade war.
MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.42%, having fallen 1.72% so far this week, while Japan's Nikkei slid 1.27%.
US S&P 500 futures fell 0.2% in Asian trading after the index dropped 0.24% on Thursday.
A whistleblower report released on Thursday said President Donald Trump not only abused his office in attempting to solicit Ukraine's interference in the 2020 US election for his political benefit, but that the White House tried to "lock down" evidence about that conduct.
The report came after the Speaker of the US House of Representatives Nancy Pelosi launched an impeachment inquiry into him this week.
"The start of the impeachment inquiry adds a new element of uncertainties to markets, in addition to ongoing concerns about the US-China trade war and the risk of a US recession," said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities.
"While no one thinks the Senate will vote for his impeachment given the Republican majority there, we could see more new revelations during a long investigation process," he added.
Mixed news headlines
On trade issues, news headlines were too mixed for investors to show a clear reaction.
CNBC reported that trade war talks were scheduled for Oct. 10-11 in Washington, citing people familiar with the arrangements, and China's top diplomat said China was willing to buy more U.S. products.
But other media reports on Thursday that the United States is unlikely to allow American firms to supply China's Huawei Technologies undermined hopes of a complete deal between the countries.
The damage is already evident as Micron Technology Inc , a major Huawei supplier, forecast first-quarter profit below Wall Street targets, pushing its share prices down 7% in after-hours trade.
That in turn hit chip-related shares in Asia such as Samsung Electronics, SK Hynix and Tokyo Electron .
In the currency market, the euro hovered near a 2-1/2-year low amid concerns about sluggish growth in the currency bloc, with rising fear of recession in its biggest economy, Germany.
The euro stood at $1.0918 after earlier falling to $1.0909, the lowest since May 12, 2017.
The gloomy outlook in Europe was in contrast to the United States, where despite some pockets of weakness -- such as manufacturing and consumer sentiment -- growth remained relatively robust, with the jobless rate at the lowest in nearly 50 years.
Some market participants suspect the dollar was also helped by continued tightness in dollar funding after US short-term borrowing costs shot up last week.
The dollar traded at 107.73 yen, after climbing to 107.96 on Thursday.
Sterling traded at $1.2330, near two-week low of $1.2303 hit on Thursday, as investors waited for the British parliament's next attempt to break the Brexit impasse.
The Mexican peso weakened to a 2-1/2-week low of 19.680 to the dollar after Mexico's central bank cut its key interest rate on Thursday, with more cuts seen on the horizon.
Oil prices fell on Friday as signs of the rapid return of output from Saudi Arabia, the world's biggest exporter, after a Sept. 14 attack on its production facilities reduced concerns about potential supply disruptions.
Brent crude futures fell 0.83% to $62.22 a barrel but stayed above Wednesday's low of $61.23, while US West Texas Intermediate (WTI) crude lost 0.44% to $56.16 per barrel, off their low of $55.41 on Thursday.