China’s threats to retaliate over the US Hong Kong law will probably remain just that; threats.

Hong Kong (AFP) — Asian markets fell on Friday as investors wound down for the end of the month, while awaiting news of progress on China-US trade talks but with optimism tainted by the row over Hong Kong.

Donald Trump’s decision to sign a bill in support of pro-democracy protesters in the city and back their rights sparked warnings of retaliation from Beijing and fueled fears for negotiations on a mini trade deal that are in their final straight.

However, China has not detailed what its response to the Hong Kong law will be and observers say it is unlikely to do anything to derail a tariffs agreement owing to its weakening economy.

“China’s threats to retaliate over the US Hong Kong law will probably remain just that; threats,” Jeffrey Halley at OANDA said.

“China has its own issues, especially around corporate debt and regional bank credit quality. It can ill-afford to waste any progress so far. Pragmatism should overcome anger.”

Still, the threat of serious measures continues to weigh on sentiment and with US markets closed for the Thanksgiving holiday, there were few catalysts to buy for Asian traders.

Hong Kong was the biggest loser, dropping 2 percent, while Shanghai fell 0.6 percent and Tokyo shed 0.5 percent.

Singapore lost 0.4 percent, and Seoul dropped 1.5 percent after the South Korean central bank lowered its growth outlook and decided against cutting interest rates despite the economy struggling.

Taipei dropped more than one percent and Mumbai fell 0.9 percent, while Manila and Jakarta also retreated. However, Jakarta and Wellington posted healthy gains.

“Markets are on a sort of ‘wait and hold’ in terms of that phase-one trade deal,” David Riley of BlueBay Asset Management told Bloomberg TV.

“If there is a skinny deal, that will allow markets and risk assets to grind higher even if there is no real prospect of a phase two or subsequent detailed negotiation occurring this side of US Presidential elections.”

But AxiTrader’s Stephen Innes said investors “are probably getting a tad jittery about turning the page on November without a trade talk venue as 15 December and the possible imposition of 15 percent tariffs on $160 billion of Chinese goods looms ominously.”

On currency markets, the pound held gains on expectations the ruling Conservatives will win next month’s general election, allowing it to push through Prime Minister Boris Johnson’s Brexit agreement and avoid a no-deal divorce from the European Union.

The Chilean central bank injected $20 billion into the economy in a bid to support the ailing peso, which hit another record low Thursday.