Chinese markets reopened on a cautious footing on Wednesday as investors braced for another flare-up in trade tensions with the US, intensifying fears that the world’s two largest economies are on the cusp of an all-out trade war.

The CSI 300 benchmark of mainland shares erased an opening gain of 0.7 per cent to slump 0.5 per cent in its first trading session after the week-long Lunar New Year holiday. The sudden reversal was triggered by news that the US Postal Service had suspended inbound parcels from China and Hong Kong.