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China reacted with indignation to the legislation, which Congress passed with overwhelming support. Beijing summoned U.S. Ambassador Terry Branstad for a dressing down and issued multiple statements threatening unspecified countermeasures.
In Hong Kong, where sometimes violent protests have dragged on for nearly six months, the Hang Seng index lost 0.2 percent to 26,893.73.
The Shanghai Composite index lost 0.5 percent to 2,889.69. In Europe, Britain's FTSE 100 declined 0.4 percent to 7,397.66. The CAC 40 in Paris gave up 0.3 percent to 5,910.53 and Germany's DAX declined 0.3 percent to 13,241.70.
U.S. futures were modestly lower, with the contracts for both the Dow Jones Industrial Average and the S&P 500 losing 0.3 percent. U.S. markets will be closed Thursday for Thanksgiving. They'll be open for a half-day on Friday.
Trump's move did not come as a surprise, given the pressure from both Democrat and Republican lawmakers to support the legislation. But it's unclear if the human rights bill, which Beijing views as "meddling" in China's internal affairs, might derail recent progress in trade talks with Washington.
"We urge the U.S. to not continue going down the wrong path, or China will take countermeasures, and the U.S. must bear all consequences," the Chinese Foreign Ministry said in a statement.
Markets appeared to be taking the developments in stride, said Stephen Innes of AxiTrader, "on the assumption that the U.S. legislation is unlikely to torpedo phase one. But of course, it does provide a stark reminder that on one level or another, U.S.-China frictions are always going to be a thorn in the markets' side."
Japan's Nikkei 225 index lost 0.1 percent to 23,409.14 while the Kospi in Seoul shed 0.4 percent to 2,118.60. Australia's S&P ASX 200 gained 0.2 percent to 6,864.00. India's Sensex added 0.1 percent to 41,059.51. Shares fell in Taiwan and most of Southeast Asia.
On Wednesday, investors capped a day of light trading on Wall Street ahead of the Thanksgiving holiday by serving up another set of stock market record highs.
The S&P 500, Dow Jones Industrial Average and Nasdaq composite closed at all-time highs for the third straight day Wednesday. And the Russell 2000 index of smaller companies hit its highest level in a year.
A batch of positive U.S. economic data helped spur the broad rally, extending the market's recent string of gains.
The S&P 500 index rose 0.4 percent to 3,153.63. The Dow picked up 0.2 percent to 28,164. The Nasdaq climbed 0.7 percent to 8,705.18, while the Russell 2000 added 0.6 percent, to 1,634.10.
The key question in China-U.S. trade negotiations is whether they will be able to reach a deal before Dec. 15, when new tariffs are set to kick in on many Chinese-made items, including smartphones and laptops.
Pressure is building on both sides to complete a limited "phase one" deal before the deadline, though the Trump administration could end up postponing it, as it did in October, to allow more time for talks.
Benchmark crude oil lost 32 cents to $57.79 per barrel in electronic trading on the New York Mercantile Exchange. It fell 30 cents to settle at $58.11 a barrel on Wednesday. Brent crude oil, the international standard, gave up 16 cents to $62.84 per barrel.
The dollar slipped to 109.44 Japanese yen from 109.54 yen on Wednesday. The euro rose to $1.1018 from $1.1007.