S&P 500 futures drop further as China says to conduct military drills in South China Sea

Dhwani Mehta FXStreet

China’s Maritime Safety Administration issued a notice on Tuesday, announcing that it will conduct military exercises in the South China Sea this week.

Key details from the notice

“Prohibits entry into a portion of waters in the Gulf of Tonkin to the west of the Leizhou Peninsula in southwestern China from Jan. 27 to Jan. 30.”

“Does not offer details on when the drills would take place or at what scale.”

This could likely be in response to a US aircraft carrier group’s, USS Theodore Roosevelt, entry into the disputed waters on Saturday to promote “freedom of the seas” in President Joe Biden’s era.

Market implications

The risk sentiment took a fresh hit on the above report, with S&P 500 futures deepening losses to the tune of 0.60% while heading towards 3,800 points.

Meanwhile, AUD/USD drops 0.23% to trade near-daily lows of 0.7689. The US dollar index picks pace, back into the bids around 90.45.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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