Economy

US stock futures are dropping after Trump tests positive for coronavirus

US stock futures plunged on Friday after President Trump and First Lady Melania TrumpHe tested positive for the new Corona virusThis added to political uncertainty in the final weeks before the elections.

S&P 500 futures fell 1.7% on Friday, indicating that US markets could drop after the New York opening bell. The Dow Jones Industrial Average is preparing to open nearly 400 low points. The contracts linked to the Nasdaq 100 index also fell 2.3%.

The yield on the 10-year US Treasury note decreased to 0.662% after settling at 0.677% in the previous session. Bond yields decline as prices rise. The ICE US dollar index, which measures the price of the dollar against a basket of currencies, rose 0.1%. The Japanese yen, also seen as a haven asset, gained 0.4% against the dollar.

The diagnosis raises a host of uncertainties that markets have to address. Mr. Trump and the first lady are both “fine at this time,” according to the White House doctor. But the president’s age of 74 makes him more vulnerable to contracting the virus. In the final month of the 2020 campaign, Mr. Trump will need to cancel personal events, possibly including the next debate with Democrat Joe Biden on October 15.

“It just creates a wide range of results or changes election odds,” said Hani Reda, portfolio manager at PineBridge Investments. “It adds a lot of uncertainty about how it happened.”

Mr.Raza said Mr. Biden – who has been ahead in the polls so far – could benefit from continuing his campaign while sidelining Mr. Trump, if the opponent was not also injured in the last debate. “If this gets Trump out of business, but not Biden, then only those odds will continue to move in that direction.”

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Investors are also assessing the likelihood of a second wave of coronavirus infections, the likelihood of a disputed election outcome, diminishing prospects for a new stimulus bill, and the pace of the economic recovery.

On Thursday, President Trump returned to the White House from Bidminster, New Jersey


Photo:

Joshua Roberts / Reuters

Wei Li, head of iShares EMEA investment strategy at BlackRock, said Mr Trump’s contagion has refocused attention on the possibility of another surge in Covid-19 infections over the winter.

“This morning, the news brings us straight back to the fact that we are still in the midst of a crisis,” Ms. Lee said. “It just makes the focus really go towards the Covid crisis.”

new Coronavirus cases in the United States have exceeded 40,000 For the third day in a row. The total confirmed cases in the United States rose to nearly 7.28 million, while the death toll approached 208,000, according to data compiled by Johns Hopkins.

Congress also appears increasingly unlikely to reach an agreement on a new aid package before the election. The House of Representatives passed a $ 2.2 trillion coronavirus relief bill on Thursday, but Republicans criticized the bill, Which gives her no chance of reaching the Republican-controlled Senate.

President Trump said early Friday that he and the first lady had tested positive for Covid-19 and had begun quarantine. His announcement, turning over the final month of the 2020 campaign, came hours after senior adviser Hope Hicks confirmed he had been infected. Photo: Andrew Caballero-Reynolds / AFP / Getty Images

“Before we go to the summer, I think the markets were more optimistic about the implementation of the ongoing fiscal stimulus package,” Ms. Lee said. “The two sides are still very far apart, so I think the markets are becoming more aware of the possibility of not reaching an agreement.”

The new jobs data at 8:30 AM ET will also show whether employment in the US continues to grow strongly as more companies call workers. The pace of employment likely calmed down in September, indicating that improvements in the labor market from the downturn have been moderate as employers face a prolonged period of uncertainty. The monthly data will give investors and voters a final glimpse of the closely watched jobs report on the health of the labor market ahead of Election Day.

Brent crude, the international benchmark for crude prices, fell 4% to $ 39.29 a barrel.

Abroad, the Stoxx Europe 600 is down 0.7%.

Stock indices fell in Tokyo, Australia and Singapore, dropping between 0.7% and 1.4%. Markets in Shanghai, Hong Kong and South Korea are closed for the holidays.

“What really worries the market is: What is the backup plan, will the US government be able to function normally?” Said You Wiren, Research Director for Equities and Exchange Traded Funds at FSMOne.com in Singapore. He also cited concerns about US stimulus plans, given that there is still no agreement between Republicans and Democrats.

The news led to a quick sell-off, but the final impact on the election was unclear, according to Eli Lee, head of investment strategy at Bank of Singapore.

One possibility, Mr. Lee said, could help Mr. Biden hold onto the lead, reducing the risks of a disputed election. But he also indicated that British Prime Minister Boris Johnson’s popularity skyrocketed after contracting Covid-19.

Write to Caitlin Ostroff at [email protected] and Chung Kohping at [email protected]

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