Worries of a hard Brexit may be roiling the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) but there's a more direct impact on ASX shares than you'd might think.
The Premier Investments Limited (ASX: PMV) share price and Lovisa Holdings Ltd (ASX: LOV) share price have come under pressure recently after a profit warning from UK fashion website ASOS plc.
The ASOS share price crashed by over 40% after it downgraded its guidance following a horror three months to November and that dragged other UK retailers like the Marks and Spencer Group Plc share price deep into the red as well, according to the Australian Financial Review.
The Afterpay Touch Group Ltd (ASX: APT) share price is also paying the price for its UK ambitions given that its acquisition of ClearPay in August from ThinkSmart Limited.
Premier Investment's owns the highly successful Smiggle stationary outlets and have opened stores in the UK, while Lovisa has also expanded its costume jewellery store network into that market.
Afterpay is a consumer financing solutions provider that's popular with fast fashion retailers and the risk of a hard Brexit is taking its toll on consumer spending in that country.
This pressure isn't likely to abate anytime soon either as few can see the prospect of a deal between Britain and the EU to smooth the path for a breakup between the two parties.
The UK government announced overnight that it's activating its emergency no-deal Brexit plan and putting aside £2 billion ($3.5 billion) to manage the risk of hard Brexit anarchy.
The problem is that Theresa May's government can't seem to articulate what this plan really is as no one knows what will happen if the UK cannot secure a deal before leaving the union in March next year.
I am hoping this event will be as potent as Y2K but the warnings from a number of UK business groups about the devastating impact of a hard Brexit will cast a long shadow over ASX stocks with direct links to the region.
Brexit is only but one of the global macro risk factors that's depressing the ASX 200 and the sour mood on the market is at risk of extending into the first few months of 2019.
Let's hope the US Federal Reserve will deliver some Christmas cheer when it announces its interest rate decision and gives its outlook later tonight.
