Trump's positive COVID test throws markets pre-election curveball

By the Chatterjee Saikat

LONDON ( Reuters)-Another issue that investors have to think about is the wellbeing of the president, who have been skitting until the November US polls.

The diagnosis of Donald Trump COVID-19 prompted a selling of stocks and crude oil and on Friday a increase in demand for the safe haven't conventional commodities, including gold and bonds.

Chris Weston, Head of Analysis at Pepperstone, Melbourne, said: "The United States President has an illness that destroys people. People are de-risked for that."

However, to a large extent, where investors come from here depends on how the US president treats a condition that has destroyed over a million people around the globe.

Chris Bailey, a European strategist on Raymond james, said: 'This is a fresh confusion in an environment that is fucked up enough, that is not the greatest.'

With moderate effects and a swift rehabilitation, stocks should stabilize and Trump could use the experience to portray his reputation as a warrior for Democratic challenger Joe Biden 's movement.

But if the 74-year-old gets really diseased and has to be hospitalized like British Prime Minister Boris Johnson did or transfers the infection to other members of his cabinet, investors are worried. Investors are worried.

"I am most anxious about the validity of the democratic process," said David Arnaud, a Canada Life Asset Manager for fixed income funds, of Trump's diagnose.

Investors have planned for an elevated uncertainty period, with the majority accepting that for the near term, stocks are still on the verge of becoming.

Volatile gauges improved from about 27 points on Thursday with widespread VIX < .VIX > up to approximately 29 points.

While movements in deep March are nowhere as common, the news of Trump is just around a month remaining for the U.S. elections at a crucial moment.

And in the face of more confusion after the November 3 U.S. polls, over its December equivalents the premium of the futures November VIX < /VXXO > contract has widened.

Similar stories persisted in monetary markets, with the implicit volatility indices of a one month dollar-yen < JPY1MO= > rising to over one month highs around 7.5%.

The volatility indicators in Australian dollars were also higher.

Arnaud stated in the coming weeks that he was prepared for volatility by growing exposure to safe haven investments like the US dollar, the Japanese yen and the United States.


In London, the future of US equity < Esc1 > plunged almost 2 percent until any losses were minimized, and the government bond yield slid as investors analyzed the effect on the capital sector of the President's illness and quarantine.

Although MUFG strategists believe the diagnosis of Trump may support his case for opening the United States economy if others, such as SAXO Bank, rebound rapidly, Biden's probability of winning may have sprung up to negative risks.

On Friday, its website revealed Betfair halted its betting on the outcomes of the US presidency.

Betfair was 60 percent expected to gain Biden on Wednesday after the first debate.

Investors that driven a long rise in world equity markets were already nervous because more US fiscal stimulus and short-term US technology shares were not progressing last month.

Meanwhile, returns in the United States for ten years.

Treasury bonds < US10YT = RR > have fallen more than 1bps to 0.66%, a traditional signal of investors searching so-called safe havens, just above one-month low.

"The biggest issue is uncertainty, whether it's Trump or Biden," said Ayako Sera of Sumitomo Mitsui Trust Bank, Tokyo Market Strategist. "As long as we're uncertain who won the election, it's difficult for markets to settle truly."

(Graphical uncertainty and leverage — at 20% and at 20%, at 20%, on 20% leverage. (JPG) (GRAPHE: FX and equity uncertainty)

(Saikat Chatterjee's report; Dhara Ranasinghe's more reporting; Alexander Smith's editing)