Trump’s Positive COVID Test Throws Markets Pre-Election Curveball

Investors, already skittish ahead of U.S elections in November, now have another thing to worry about: the president’s health.

👤Donald Trump’s COVID-19 diagnosis triggered a sell-off in stocks and oil and a surge in demand for traditional safe haven assets such as gold and bonds on Friday.

“The President of the United States has got a disease which kills people. People are de-risking because of that,” Chris Weston, head of research at Pepperstone in Melbourne, said.

But where investors go from here depends, to a large degree, on how the U.S. president copes with a disease which has killed more than a million people around the world.

“This is a new uncertainty in a world which is mixed-up already, which is not the best,” said Chris Bailey, a European strategist at Raymond James.

If his symptoms are mild and he recovers quickly, markets could stabilise and Trump could use the experience to project his image as fighter in the campaign against Democratic challenger Joe Biden.

But if the 74-year-old gets very sick and has to be hospitalised, as British Prime Minister Boris Johnson was earlier in the year, or the virus spreads to other members of his administration, investors will be alarmed.

“What is getting me worried more than anything else is the question mark over the legitimacy of the election process,” David Arnaud, a fixed income fund manager at Canada Life Asset Management, said of Trump’s diagnosis.

The news prompted investors to prepare for a period of heightened volatility, with most agreed that markets will remain on edge for the foreseeable future.

Volatility gauges rose, with the widely-watched VIX <.VIX> up to nearly 29 points, from around 27 points on Thursday.