GENEVA — The US stock indices turned negative in Thursday's session as the rising tensions around Hong Kong's new national security law and Donald Trump's attacks on social media companies led to some profit taking after American stocks advanced to highest levels in almost three months. Financials and tech stocks suffered the biggest losses in New York. Twitter slid 4.45% as Donald Trump signed an executive order to remove some of the legal protections that social media companies enjoy after Twitter announced to fact-check his tweets earlier this week. Facebook (-1.61%) followed up on Twitter's losses, while Snap rallied 7.35% on hope that Twitter's misfortune could be a window of opportunity for its competitors. Trump's personal fight against social media companies will likely remain short lived if his allegations are unjustified. But the fact that the COVID recovery could now cause a decent profit-taking in technology companies and move capital towards sectors which should benefit more from the business reopening is a major risk for the US tech stocks. Lower appetite in technology stocks could also slowdown the overall recovery, given the high market share of tech stocks in indices. Financials, on the other hand, are under the pressure of mounting tensions between the US and China as US officials said they are ‘not happy' with Hong Kong's new national security law restricting rights and freedoms. US officials said they would announce their response to the new law on Friday. US reaction will likely put Hong Kong's special status as a global financial hub in danger, worsening the already tense relationship with China. HSBC Holdings (-2.16%) has been among the leading losers in Hong Kong on Friday, Bank of China slid 0.70%. The deteriorating market sentiment weighed on most major Asian indices, as well. Stocks in Tokyo and Sydney retreated 0.25% and 0.70% respectively on mixed economic data. Shanghai's Composite eased 0.11% as Hang Seng extended losses by 0.68% before what could be another chaotic weekend in the streets of Hong Kong, while there is a mounting risk of a military intervention from China. Activity in FTSE (-0.71%) and DAX (-1.12%) hints that the European stocks could reverse a part of this week's losses before the weekly closing bell. Financials should continue feeling the pinch of Hong Kong worries, as we can see a deeper downside correction across the energy stocks on stagnating oil prices. WTI crude sputters following the surprise buildup in US oil inventories last week. The latest EIA data showed that the US stockpiles increased by 7.9 million barrels last week, versus a 2.5-mio barrel decrease penciled in by analysts, denting the appetite on lower-supply / better-demand dynamic. Top sellers are waiting in ambush near $35 per barrel. We could possibly see another retreat toward the $32/30 support zone. In the FX, the US dollar plunged as safe haven capital flew toward the yen, Swiss franc and gold. The EURUSD advanced past the 1.11 on the back of a broadly softer US dollar and hope that the much-needed 750-billion-euro fiscal rescue package could give a boost the Eurozone economy. The latest proposal from the European Commission needs an approval first, but the so-called frugal four will likely come round to the rescue fund though there are uncertainties on how the historical rescue package would be implemented. Technically, the euro recovery could gain pace if the major 61.8% Fibonacci resistance at 1.1160 is cleared and target the 100-week moving average near the 1.1225 mark. Cable tests the 50-day moving average resistance to the upside. A further plunge in US dollar could give a short term energy shot to the pound, yet the medium term outlook remains negative for sterling as the no-deal Brexit anxieties will likely curb the appetite before the 1.25/1.2515 area (psychological support / 100-day moving average). Price advances in sterling could be interesting top-selling opportunities as deadlock looms before the next round of Brexit negotiations next week. The UK will start preparing for a no-deal divorce if we do not see a material progress in talks next week. The latter would boost the no-deal Brexit pricing and lead to headwinds in sterling. Finally, support is building near the 1.3730 in USDCAD, as the fading rally in oil began weighing on the Loonie. Due today, the GDP data should confirm a 9% decline in March. Along with the stagnating oil recovery, the latest growth figures could give cold feet to CAD-bulls, ignite some profit taking and push the USDCAD back above its 100-day moving average (1.38). — The writer is senior analyst at Swissquote Bank