NEW YORK – News that US President Donald Trump and his wife Melania had tested positive for the coronavirus rocked global markets, stoking uncertainty in the world’s biggest economy just one month before Americans go to the polls.
Confirmation of the positive test overnight first hit Asian bourses, setting up Europe for a weak start, which was confirmed when Wall Street followed suit and opened about 1% lower.
Investors then trimmed their losses, with the Dow ending the day lower just 0.5%, taking the view that, at this stage, there was no reason to panic – although that could change given the huge potential implications of a president falling ill weeks ahead of the November 3 election.
Briefing.com analyst Patrick O’Hare said the initial “knee-jerk sell-off makes sense” given no one knows how the president’s diagnosis will affect the vote or a pending contested Supreme Court nomination.
The fact that the market stabilised after the initial fall shows investors were not “catastrophising” the possible outcomes, O’Hare said.
Upbeat comments from House Speaker Nancy Pelosi regarding ongoing talks with Treasury Secretary Steven Mnuchin on a long-delayed stimulus package for the battered US economy also lifted traders’ hopes.
US jobs data came in weaker than expected, adding to doubts about the economy’s recovery, while oil prices struggled amid concerns about too much supply and too little demand.
‘Political uncertainty’
“The increase in political uncertainty connected with Trump’s diagnosis is... weighing on stocks and stock futures,” Rabobank analyst Jane Foley said.
“There are sufficient unknowns at this stage to fan speculation that the election could be quite different from the one that was expected just 24 hours ago.”
The extraordinary setback for Trump, 74, has immediate political consequences just 31 days before Election Day, forcing him to cancel campaign trips and adding new volatility to an already turbulent contest.
The White House doctor said Trump, who was reported to be suffering “mild symptoms,” would continue his presidential “duties without disruption”.
After markets closed, the White House said Trump would spend the coming days at a military hospital just outside Washington.
Trump took a test Thursday after close aide Hope Hicks tested positive, with both he and his wife then going into quarantine at the White House.
“We are seeing some risk aversion on the back of the Trump news, although as yet the moves we’re seeing are quite modest,” Oanda analyst Craig Erlam said.
“Should Trump’s health deteriorate, I expect we would see more significant moves, but there’s no sign of that at this moment.” – AFP, October 3, 2020
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