Global markets rattled by US President’s test result

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LONDON/SINGAPORE • equities retreated yesterday after US President Donald Trump revealed that he and his wife had 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, while the yen and Treasuries – often seen as havens in times of market stress – rose.

Wall Street’s main indexes tumbled at the open yesterday, with the Dow Jones Industrial Average down 280.51 points, or 1.01 per cent. The S&P 500 opened lower by 41.86 points, or 1.24 per cent, while the Nasdaq Composite dropped 243.98 points, or 2.15 per cent, at the opening bell.

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

Over in Asia, Singapore’s Straits Times Index fell as much as 1.2 per cent after the news broke, but regained ground to close 0.19 per cent lower yesterday, amid holiday closures in many key Asian hubs.

Japan’s Nikkei closed down 0.7 per cent as trading resumed following Thursday’s market shutdown caused by a technical fault.

Oil prices tanked more than 4 per cent, extending Thursday’s heady losses that were also rooted in the market being awash in crude amid timid demand.

“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 said.

Independent Advisor Alliance chief investment officer Chris Zaccarelli said: “To the extent that government functions as normal, will be concerned, but not necessarily panic. However, this incident highlights how Covid-19 continues to be a threat to the economy and markets.”

Investors were already feeling pessimistic over US lawmakers’ failure to pass a new stimulus Bill, dealers said. The House of Representatives passed a US$2.2 trillion (S$3 trillion) Democrat-only stimulus package that Republicans reject.

“We are seeing some risk aversion… although, as yet, the moves we are seeing are quite modest,” Oanda analyst Craig Erlam said. “Should Trump’s health deteriorate, I expect we would see more significant moves.”

Ms Karen Ward, chief market strategist for Europe, the Middle East and Africa at JP Morgan Asset Management, said: “Market sentiment was already delicately balanced ahead of the… election, and the news only adds to the uncertainty.”

Still, “with such a wide range of outcomes and implications stemming from the President’s diagnosis, it is too soon to ascertain what the final market direction will be”.

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