The president and his wife have both tested positive, creating a challenge for the election campaign
President Trump and US first lady Melania Trump have both tested positive for COVID-19, throwing a curveball to global financial markets, with investors already concerned about the election.
While both are reportedly well despite contracting the virus, it raises questions about the election campaign with Trump now constrained by a fourteen day quarantine. The president’s age and weight have also been noted as risks.
The positive test was announced early Friday following the president’s Thursday evening appearance on Fox News in which he confirmed that one of his closest aides had contracted the virus.
Tonight, @FLOTUS and I tested positive for COVID-19. We will begin our quarantine and recovery process immediately. We will get through this TOGETHER!
— Donald J. Trump (@realDonaldTrump) October 2, 2020
US equities futures fell in early trading as the financial markets digested the latest twist in the battle for the White House.
Invalid election?
There is already talk that President Trump may call for the election – now just over one month away – to be invalidated. But there are other scenarios that analysts and investors will consider.
“Investors should hedge themselves against S&P. Most people may still be having their hedges on, given what happened in March,” Justin Tang, the head of Asian research at United First Partners in Singapore told Bloomberg. “A lot depends on what happens in the next seven days. If Trump goes to ICU, it is going to be a big problem, but if he is asymptomatic, that volatility may get contained.”
Among the markets rattled by the latest news were oil. The international benchmark Brent was down around 3.7% and crops and copper also slid to multiweek lows.
“The market will be trading nervous today,” Ole Hansen, head of commodity strategy at Saxo Bank A/S told Bloomberg. “The immediate result was a flight to safety with the dollar, gold and bonds all receiving a bid while stocks, oil and copper sold off.”
Most Asian markets were closed Friday for public holidays but in Japan, where news of the president’s test result came late in the trading day, investors sold off riskier assets.
In Europe, markets opened lower as analysts speculated on the potential impact.
A taste of things to come?
Many analysts believe that concern that already existed around the election result means that markets are already shielded to some extent.
“The key takeaway is that US equity futures dislike that Trump is ill, which could be a pre-warning of what will happen if he loses on November 3,” Andreas Steno Larsen, foreign exchange strategist at Nordea Markets told the Financial Times.
