Global stock markets down as U.S. earnings disappoint

Pedestrians pass before a share prices board in Tokyo on July 22, 2015.

YOSHIKAZU TSUNO/AFP/Getty Images

SEOUL, South Korea - Global stock markets dropped Wednesday after U.S. earnings fell short of expectations and investors began to focus on next week's Federal Reserve meeting.

Britain's FTSE 100 fell 0.7 percent to 6,719.52 and Germany's DAX declined 0.4 percent to 11,563.48. France's CAC 40 was down 0.4 percent to 5,086.53. Futures augured a weak start for Wall Street: Both S&P 500 and Dow futures dropped 0.4 percent.

After Federal Reserve chief Janet Yellen recently reiterated U.S. interest rates are likely to rise this year, investors are looking to next week's policy meeting for clues about the probable timing. Interest rates in the U.S., along with other major economies, have been at record lows since the 2008 financial crisis, which has been a boon for stock markets.

"With Greece and China slipping off the table, investors are turning their attention to the U.S. where the earnings season is underway," said Bernard Aw, a market strategist at IG, in a commentary. "Moreover, traders are positioning for the FOMC," he said referring to the U.S. Federal Reserve's two-day policy meeting next week.

Asian stocks closed lower. Japan's Nikkei 225 fell 1.2 percent to 20,593.67 and South Korea's Kospi lost 0.9 percent to 2,064.73. Hong Kong's Hang Seng slipped 1 percent to 25,282.62. Australia's S&P/ASX 200 dropped 1.6 percent to 5,614.60. Stocks in Taiwan and Southeast Asia were also lower.

United Technologies reported earnings that didn't meet forecasts. The aerospace company also cut its outlook for 2015, citing weaker sales in Europe and China's slowing economy. Apple fell in after-hours trading after it reported strong iPhone sales but revealed little about how sales of its new smartwatch were doing. The company also issued a forecast for the current quarter that suggested revenue could fall below estimates. Microsoft booked an $8.4 billion expense to write off the Nokia phone business it bought a year ago.

"It's quite incredible how Apple's earnings release and forecast affect market sentiments," said Aw, the IG strategist. "This is particularly true for Asian companies who have substantial businesses with the technology giant."

Benchmark U.S. crude slipped 71 cents to $50.15 a barrel in electronic trading on the New York Mercantile Exchange The contract rose 21 cents to close at $50.36 a barrel in New York on Tuesday. Brent crude, a benchmark for international oils used by many U.S. refineries, fell 60 cents at $56.44 a barrel in London.

The euro strengthened to $1.0943 from $1.0937 on Tuesday. The dollar weakened to 123.75 yen from 123.87 yen.