By Sam Meredith, CNBC–
U.S. stock index futures dropped Monday morning, pressured by worries that an ongoing trade dispute between Washington and Beijing could tip the world and U.S. economies into recession.
Losses accelerated in early trading after Hong Kong International Airport cancelled all departures for the remainder of the day, citing serious disruptions due to intensifying protests.
The increasingly violent protests since June have plunged the Asian financial hub into its most serious crisis in decades and are one of the biggest popular challenges to Chinese leader Xi Jinping since he came to power in 2012.
Around 6 a.m. ET, Dow futures indicating a negative open of about 120 points. Futures on the S&P and Nasdaq were both lower.
Market focus is largely attuned to simmering trade tensions between the U.S. and China. On Monday, the People’s Bank of China (PBOC) set its daily midpoint for yuan trading — which determines the limits for its onshore movement — at 7.0211 per dollar. That was weaker than Friday’s session, but beat market expectations.
Market participants have been monitoring the dollar/yuan exchange rate closely following an escalation in trade tensions between Washington and Beijing.
The yuan depreciated past the 7-per-dollar level last week for the first time since the global financial crisis in 2008. The move prompted the U.S. Treasury Department to designate China as a currency manipulator.
A weaker currency makes a country’s exports cheaper and President Donald Trump’s administration has consistently complained that a cheaper yuan would give China a trade advantage.
The U.S. president said Friday that the U.S. would continue to hold trade talks with Beijing, but that Washington was not prepared to make a deal for now.
On the data front, the Federal Budget for July is expected to be published at around 2:00 p.m. ET.
In corporate news, Sysco and Barrick Gold are both expected to publish quarterly earnings before the opening bell.
Bloom Energy and Tencent Music will report their latest results after market close.
— CNBC’s Saheli Roy Choudhury contributed to this report.