By Marketwatch and Associated Press
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 /zigman2/quotes/210598030/delayed HK:HSI +0.01% fell 1%, while the Shanghai Composite /zigman2/quotes/210598127/delayed CN:SHCOMP -0.64% and Shenzhen Composite /zigman2/quotes/210598015/delayed CN:399106 -1.13% dropped about 0.3% each. Japan’s Nikkei /zigman2/quotes/210597971/delayed JP:NIK +0.70% was about flat while South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 +1.07% slipped 0.6%. Benchmark indexes in Taiwan /zigman2/quotes/210597977/delayed TW:Y9999 +0.66% , Singapore /zigman2/quotes/210597985/delayed SG:STI +0.22% and Indonesia /zigman2/quotes/210597981/delayed ID:JAKIDX +0.48% dipped, but stocks rose slightly in Malaysia /zigman2/quotes/210598052/delayed MY:FBMKLCI +0.08% . Australia’s S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO +0.87% declined 0.2%.
Among individual stocks, SoftBank /zigman2/quotes/207303954/delayed JP:9984 -0.68% fell in Tokyo trading after announcing a deal to take over WeWork, offering the beleaguered startup a $5 billion lifeline. Rakuten /zigman2/quotes/201861450/delayed JP:4755 +0.64% and Sony /zigman2/quotes/201361720/delayed JP:6758 +0.37% also declined. In Hong Kong, tech companies AAC /zigman2/quotes/201441510/delayed HK:2018 +1.79% and Tencent /zigman2/quotes/204605823/delayed HK:700 +0.06% dropped, along with oil producer CNOOC /zigman2/quotes/203421416/delayed HK:883 -0.33% . Apple component maker LG Display /zigman2/quotes/204226570/delayed KR:034220 +0.34% and chip maker SK Hynix /zigman2/quotes/206420319/delayed KR:000660 +2.16% sank in South Korea. Beach Energy /zigman2/quotes/200513631/delayed AU:BPT +1.28% and National Australia Bank /zigman2/quotes/210431826/delayed AU:NAB -0.58% 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 /zigman2/quotes/208579720/composite BA +1.15% , Caterpillar /zigman2/quotes/203434128/composite CAT +1.30% 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 /zigman2/quotes/210599714/realtime SPX +0.77% fell 0.4% to 2,995.99. The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.80% dropped 0.2% to 26,788.10. The Nasdaq /zigman2/quotes/210598365/realtime COMP +0.73% , 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 /zigman2/quotes/203508018/composite MCD -0.02% 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 /zigman2/quotes/206313935/composite TRV -0.28% 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 /zigman2/quotes/209727276/delayed CLZ19 +0.36% , 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.
The dollar /zigman2/quotes/210561789/realtime/sampled USDJPY -0.0496% declined to 108.30 yen from Tuesday’s 108.46 yen.