Global financial markets rocked by Trump coronavirus diagnosis

Financial markets were volatile in the wake of the news with many analysts unsure of the economic implications

Ben Chu
Economics Editor
Friday 02 October 2020 16:10
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American stock markets opened sharply lower, with the S&P 500 shedding 1.4 per cent and the Nasdaq losing 1.7 per cent.
American stock markets opened sharply lower, with the S&P 500 shedding 1.4 per cent and the Nasdaq losing 1.7 per cent.
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Financial markets around the world responded to the stunning news that Donald Trump has contracted coronavirus just a month out from the US presidential election with volatile trading and a dash to safety.

Company share prices in Asia wilted overnight as soon as the news broke. European stock market were also down.

American stock markets opened sharply lower, with the S&P 500 shedding 1.4 per cent and the Nasdaq losing 1.7 per cent.

More than nine out of ten stocks were trading lower, with Apple, the world’s most valuable listed company, down 2 per cent.

The value of traditional safe-haven assets, including US government debt and the Japanese Yen, rose.

A much-watched market volatility index spiked higher, as traders scrambled to process the implications of the news that the president would be self-isolating rather than campaigning for the next fortnight.

Analysts were unsure what to make of the news from the White House, with some suggesting that it would make a victory for the Democrat candidate Joe Biden – who is ahead in the polls - in November more likely, but others speculating that Trump could benefit from a sympathy vote.

“A close and contested outcome with a drawn-out period of rancour and instability would be bad news for markets,” said Trevor Greetham, of Royal London Asset Management.

“If anything the President’s illness makes that more likely.”

Meanwhile, the US Bureau of Labor statistics reported on Friday that the US economy created 661,000 new jobs in September, lower than analysts’ expectations and a marked slowdown on previous months.

It comes as proposals to extend trillions of dollars in emergency aid to jobless households and struggling US businesses remains blocked in Congress.

“Job growth is moderating just as fiscal aid is expiring – a toxic cocktail,” said Kathy Bostjancic of Oxford Economics.  

“The slowing momentum in the labor market bodes poorly for the broader recovery and points to increasing scarring effects from the crisis.”

Analysts said further politics-driven volatility for financial markets was likely over the coming weeks.

“With a further stimulus package still stuck in Congress, a race to confirm a Supreme Court justice, and concerns around mail-in ballots, this [the President’s coronavirus infection] is another twist in an already uncertain election,” said Randeep Somel of M&G Investments

“The markets over the next month are more likely to be driven by news from Washington than fundamentals.”  

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