Asian shares dropped Tuesday, ahead of a crucial speech by U.K. Prime Minister Theresa May, who was set to announce a clean break from the European Union.
During her speech, after the close of Asian markets, May confirmed she’d put the terms of a Brexit to a parliamentary vote, seeking the best possible trading relationship with Europe’s single market but not membership.
May’s comments reinforce expectations that she will prioritize border and immigration control over access to the common European market. Uncertainty initially sent the British pound down over 1% against the U.S. dollar late Monday, though it recovered slightly in early Asian trade Tuesday, and rallied in the immediate wake of May’s vote confirmation.
Markets would have been resilient to May’s speech on its own, but the fact that the speech comes so close to Donald Trump ‘s inauguration as U.S. president makes investors anxious, said Gary Huxtable, a client adviser at Atlantic Pacific Securities.
“Investors are sitting on pretty healthy profits and any sign of anxiety is an incentive to sell,” he said.
In China, the nation’s key domestic stock markets were down further on Tuesday, after shares suffered their biggest daily drop in over a month on Monday. This was weighed by a sharp correction in the last trading hour amid concerns of fast-rising supply of new shares, with technology stocks igniting the selloff.
“Sentiment was affected by the slew of (initial public offerings) with a majority of them concentrated on the technology board with valuations not being supportive,” said Caroline Yu Maurer, who heads Greater China equities at BNP Paribas Investment Partners. Chinese markets remain dominated by retail investors who trade mostly on sentiment, she said.