Asian markets retreated in early trading Wednesday amid new uncertainty involving Brexit and Hong Kong.
On Tuesday, British Prime Minister Boris Johnson won Parliament’s backing for the substance of his exit deal but lost a key vote on its timing, a result that inches him closer to his goal of leading his country out of the European Union — but effectively guarantees it won’t happen on the scheduled date of Oct. 31. The votes plunge the tortuous Brexit process back into grimly familiar territory: acrimonious uncertainty.
Late Tuesday, the Financial Times reported that China is preparing plans to replace embattled Hong Kong administrator Carrie Lam, whose government has been the subjects of massive pro-democracy protests for five months. The report said a new administrator could be in place by March.
Hong Kong’s Hang Seng Index
fell 1%, while the Shanghai Composite
and Shenzhen Composite
dropped about 0.3% each. Japan’s Nikkei
was about flat while South Korea’s Kospi
slipped 0.6%. Benchmark indexes in Taiwan
dipped, but stocks rose slightly in Malaysia
. Australia’s S&P/ASX 200
Among individual stocks, SoftBank
fell in Tokyo trading after announcing a deal to take over WeWork, offering the beleaguered startup a $5 billion lifeline. Rakuten
also declined. In Hong Kong, tech companies AAC
dropped, along with oil producer CNOOC
. Apple component maker LG Display
and chip maker SK Hynix
sank in South Korea. Beach Energy
and National Australia Bank
declined in Australia.
Earlier, U.S. shares retreated, led by a tech sell-off, as investors weighed mixed earnings from McDonald’s, Procter & Gamble and other big companies. That blunted investor optimism that had been fed by hopes for progress in settling a damaging U.S.-Chinese tariff war.
“Alongside Brexit, the relatively mixed set of earnings out of the US overnight provides poor leads for Asia markets,” said Jingyi Pan of IG in a report.
More results from Boeing
and other industrial names due Wednesday “could cap the gains for the S&P 500 index,” said Pan.
On Wall Street, the benchmark S&P 500 index
fell 0.4% to 2,995.99. The Dow Jones Industrial Average
dropped 0.2% to 26,788.10. The Nasdaq
, which is heavily weighted with technology stocks, bore the brunt of the selling, losing 0.7% to 8,104.30.
Investors have been shifting their focus to corporate earnings reports as they wait for developments in U.S.-Chinese trade negotiations. Investors were optimistic after President Donald Trump agreed to postpone a planned tariff hike following the latest talks in Washington. That helped the S&P 500 to turn in gains for the past two weeks.
Analysts came into this latest earnings season expecting profits to decline overall for companies in the S&P 500. But with about 15% of companies in the index reporting so far, results have been unexpectedly positive.
Earnings growth fell slightly in the first and second quarters, according to data from FactSet, which was better than Wall Street’s expectation at the start of those reporting seasons.
A few large companies disappointed investors Tuesday. McDonald’s
slid 5% after reporting that third-quarter profit and revenue fell short of forecasts. It was one of the big decliners among companies that rely on consumer spending. Travelers
led the financial sector slide. The insurance company sank 8.3% after it reported lower-than-expected earnings.
Benchmark U.S. crude
lost 41 cents to $54.07 per barrel in electronic trading on the New York Mercantile Exchange. The contract gained $1.97 on Tuesday to close at $54.48. Brent crude
, used to price international oils, retreated 32 cents to $59.39 per barrel in London. It rose $1.74 the previous session to $59.70.
declined to 108.30 yen from Tuesday’s 108.46 yen.