World stocks slide after Trump catches coronavirus

By: AFP      Published: 04:33 PM, 2 Oct, 2020
World stocks slide after Trump catches coronavirus
A woman walks past an electronic board displaying stock prices near the Tokyo Stock Exchange in Tokyo on October 2, 2020. AFP

Global equities dropped Friday after US President Donald Trump revealed that he and his wife have tested positive for Covid-19, sparking fresh political chaos in the world's biggest economy just one month before Americans go to the polls.

The heightened turmoil sent US futures sinking as investors nervously awaited Wall Street's reopening at 1330 GMT, with key non-farm payrolls data slated for publication.

Europe's major bourses dropped sharply at the open before clawing back ground.

Japan's Nikkei closed down 0.7 percent as trading resumed following Thursday's market shutdown caused by a technical fault -- and amid holiday closures in many key Asian hubs.

Oil prices tanked four percent, extending Thursday's heady losses that were also rooted in the market being awash in crude amid timid demand.

'Political uncertainty'

"The increase in political uncertainty connected with Trump's diagnosis is ... weighing on stocks and stock futures, and supporting safe havens such as the yen, Swiss franc and the US dollar," Rabobank analyst Jane Foley told AFP. "The extent to which the election campaign is affected will depend on the outcome for Trump's health."

She added: "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 a contest already steeped in tension.

The White House doctor has said that both were well and that Trump would continue his presidential "duties without disruption".

The president had taken a test after his close White House aide Hope Hicks had tested positive earlier in the day, meaning he will now have to go into quarantine just weeks before one of the most crucial elections the country has ever had.

Investors were already feeling pessimistic over US lawmakers' failure to pass a new stimulus bill, dealers said.

All eyes on Trump health

"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 told AFP.

"Should Trump's health deteriorate, I expect we would see more significant moves, but there's no sign of that at this moment."

Sentiment had already been weak as hopes for a new US rescue package fade.

"It is also worth noting that stimulus talks this week have not gone well which may be contributing to the risk-aversion we're seeing in the markets, while today's (US) jobs report may be making people a little cautious," Erlam added.

Democrats pushed their latest $2.2 trillion proposal through the House, where they hold a majority, but without any opposition support, there is no chance it will be agreed by the Republican-dominated Senate.

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