Global markets fall after US President Trump reveals coronavirus diagnosis
US President Donald Trump's disclosure that he and First Lady Melania have tested positive for coronavirus, threw global markets into uncertainty with losses being recorded almost everywhere. US equity futures plunged, Asia stock markets backpedaled, European markets opened more than one percent lower on Friday, and a similar trend was seen in Australia. Unsurprisingly, market watchers also warned about higher volatility. Here's what happened.
Soon after Trump's tweet, DOW Futures fell by more than 450 points, reports CNNBusiness. S&P 500 (SPX) futures and NASDAQ (COMP) futures slumped by 1.7% and 2.3% respectively. By 2:37 PM, US Equity Futures had dipped over 1.8%. Oil futures also witnessed turmoil with US crude futures falling 4.3% to $37.06 per barrel, and Brent plunging by 4.2% to hit $39.20 per barrel.
Across the ocean, in Europe, markets opened over 1 percent lower in early trading, though they registered some gains later. While France's CAC 40 (CAC40) dipped by 2%, Germany's DAX (DAX) fell by 1.1%. When the news broke, Japan was late into the trading day, but still recorded losses. Nikkei 225 (N225) slumped by 0.7%. In Australia, S&P/ASX 200 fell by 1.4%.
Evidently, investors rushed to put money in "safe havens." As prices of US Treasury Bonds soared, yields were lower. Gold became costlier and the Japanese Yen gained against other currencies. About the trends, Gary Dugan, chief executive officer at Global CIO Office, told Bloomberg, "We're struggling to get our head around it because such things are clearly not in the manual of investment management."
"This (Trump's diagnosis and self-isolation) will induce nervousness in the markets and we could see a 10% correction in US equities that will likely drag down Asian equities for the balance of the year," he said, adding people might view "Asia as an attractive" option.
Separately, Jeff Henriksen, co-founder and CEO of Thorpe Abbotts Capital, said, "I think that you will see probably the tech sector continue to hold up pretty well, and I would think that some of the more cyclical names that require a recovery are probably going to not benefit." He said the latest development would put investors' mind on the coronavirus crisis again, reports CNBC.
Trump's diagnosis sent shudders globally and threw uncertainty over the November 3 elections, his campaigning, and the two Presidential debates scheduled for later this month. Notably, the US President joins a growing list of prominent personalities to have tested positive for coronavirus. In March, UK Prime Minister Boris Johnson contracted the infection and was later moved to intensive care.
In July, Brazil's President Jair Bolsonaro, who had for weeks trivialized the pandemic, tested positive. Monaco's Prince Albert II, UK's Prince Charles, Russian Prime Minister Mikhail Mishustin, Guinea-Bissau's Prime Minister Nuno Gomes Nabiam, and Honduras President Juan Orlando Hernandez tested positive. Globally, the virus has infected 34,522,161 and killed 1,028,285. In the US alone, 7,494,671 have contracted the infection and 212,660 died.
Meanwhile, Trump's coronavirus diagnosis sparked an online firestorm in China, the country he has repeatedly blamed for the pandemic. The reactions to his infection ranged from disbelief, sympathy to even celebration. "President Trump and the first lady have paid the price for his gamble to play down the COVID-19," wrote Hu Xijin the editor of Global Times, the mouthpiece of the Chinese Communist Party.
Though it hasn't been disclosed whether Trump has shown symptoms, White House Physician Sean P. Conley said he and Melania were doing fine. Notably, at 74, Trump faces a higher risk of coronavirus-linked complications. "I expect the President to continue carrying out his duties without disruption while recovering, and I will keep you updated on any future developments," Conley said in a statement.