Major US stock index futures extended declines during the Asian session amid fears of fresh tensions between China and the United States. Market participants are afraid of renewed diplomatic tensions as China is looking forward to forcing a new national security law on Hong Kong. President Donald Trump warned that his administration would react "very strongly" to the legislation. The Dow Jones Industrial Average futures declined to 24103, the S&P500 futures dipped to 2903, and Nasdaq futures tumbled to 9241.
The dollar index, which measures the greenback against a basket of major currencies, rebounded sharply to 99.80 amid demand for safety as investors feared a new round of tensions between China and the United States. The mounting instability in Hong Kong could lead to further tensions between Washington and Beijing, especially that there is a risk that Hong Kong could lose some of its favorable US trading terms. The risk-sensitive AUDUSD declined to $0.6511, the EURUSD dropped to 1.0900 erasing previous gains, and the GBPUSD tumbled to 1.2162 amid increased prospects of negative interest rates.
Gold prices edged higher, recovering from steep losses incurred yesterday, supported by fears of a full-blown clash between China and the United States. The price of a gold ounce rose to $1738 after trading as low as $1718, the price of a silver ounce declined sharply to $16.72, and palladium futures fell to $2031.
Oil prices tumbled as China dropped its economic growth target due to the uncertainty created by the Coronavirus. China's National People's Congress launched a one-week meeting with the government and set targets for the Chinese economy but abandoned target for 2020 GDP. On the other hand, investors are cautious of a serious collision between China and the United States, which could weigh on the global economy, and hit improving demand levels. The West Texas Intermediate crude July delivery dropped to $30.71, and Brent oil July delivery fell to $33.54.