The Emerging Markets Index by American finance company, MSCI fell 1%, marking its most significant drop in a week and halting a four-day winning streak, its longest since February.

The decline followed the US government's overnight decision to restrict exports of some chips manufactured by Nvidia and AMD to China, a crucial market for the companies' top-tier products.

Asian stock markets, which are closely tied to the chip industry's supply chains, also fell. Hong Kong's tech index was down 3.89%. Taiwan's benchmark dropped 1.96%, while South Korea's Kospi slid 1.21%.

On top of reviews into pharmaceutical and chip imports, US President, Donald Trump also ordered a probe into potential new tariffs on all US critical minerals imports.

China, meanwhile, instructed its airlines to cease taking deliveries of Boeing jets, as reported by Bloomberg News.

The relentless tit-for-tat tariff exchanges between the US and China, compounded by the unpredictability of Trump's policy shifts, have left traders anxious about the broader implications for global economic growth.

"It has been our view that Trump cannot win the tariff battle with China. China can hold out for longer than the US and eventually Trump will need to back down," said Mohit Kumar, chief financial economist at Jefferies.

"However, the initial administration policy is likely to be to isolate China to get more favourable terms. Thus, the path of an eventual deal is likely to be through more market volatility," Kumar said.

The currencies gauge remained unchanged, while the SA Rand and Thai Baht advanced by 0.5% and 0.9% respectively.  Both currencies closely track the price of gold, which is up 2.5% as investors seek safety in precious metals.

In Central and Eastern Europe (CEE), the broader index tracking the region's stocks slipped 0.3%.

The CEE economies have deep trade ties with the larger Germany and French economies. However, S&P Global told Reuters that the region is unlikely to expect a big boost from Germany's fiscal expansion.

Investors were also closely monitoring US trade negotiations with Japan, Indonesia, South Korea and Vietnam at a time when Chinese President Xi Jinping is trying to bolster relations with Beijing's Southeast Asian neighbours.

Pakistan's international dollar bonds, rose one cent on the dollar after global ratings agency Fitch upgraded its foreign-currency credit rating to 'B-' from 'CCC+', on Tuesday.

Elsewhere, Ghana and the International Monetary Fund reached a staff-level agreement on the fourth review of its $3 billion loan programme. The Cedi and hard-currency bonds were little changed.

---Reuters---