Stocks recover on signs of Trump's improving health
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[October 05, 2020]
By Danilo Masoni
MILAN (Reuters) - Stocks and other risk
assets rose on Monday as signs that Donald Trump's health was improving
brought relief to markets after the uncertainty of his COVID-19
infection sent investors rushing for safety last week.
The U.S. President, 74, was flown to a hospital for treatment on Friday,
but his doctors said he had responded well and could return to the White
House as soon as on Monday.
The MSCI world equity index <.MIWD00000PUS>, which tracks shares in 49
countries, was up 0.4% by 0812 GMT, supported by overnight gains across
Asia and a positive start in Europe.
The pan-European STOXX 600 <.STOXX> rose 0.7%. S&P 500 futures <EScv1>
rose 0.5% and Nasdaq futures <NQc1> 0.8%, indicating a similarly strong
start on Wall Street later.
Overhanging the relief rally, however, were concerns that Trump's case
could be more severe than public disclosures suggest, and that more
restrictive measures by governments to slow coronavirus infections could
harm the economic recovery.
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Some traders were concerned by doctors' admission that Trump had been
given supplementary oxygen and steroids.
"Many questions remain including the use of the steroid drug ... which
is usually reserved for those with severe illness," said Raymond James
strategist Chris Bailey in London. "Global cases now top 35 million and
various new restrictions in Paris, New York, etc",
A survey on Monday showed the euro zone's economic recovery faltered
last month as new restrictions sent its dominant service sector into
reverse.
IHS Markit's final composite Purchasing Managers' Index fell to 50.4,
just above the 50 mark separating growth from contraction.
Trump's infection also comes less than one month before the presidential
election on Nov. 3, potentially fuelling more market volatility and
making the outcome of the vote even more difficult to predict.
"In terms of the impact on the election, we haven’t seen enough polling
to assess whether this increases or decreases his chances of winning,"
said Deutsche Bank strategists.
According to a Reuters/Ipsos poll released on Sunday, Democrat contender
Joe Biden opened his widest lead in a month in the U.S. presidential
race.
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The New York Stock Exchange is pictured in the Manhattan borough of
New York City, New York, U.S., October 2, 2020. REUTERS/Carlo
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The volatility VIX index <.VIX>, known as Wall Street's fear gauge,
remained close to the one-week high it hit on Friday.
Meantime, suggestions Trump could leave hospital sent oil prices up
more than 2%. An escalating workers' strike in Norway that has shut
four of Equinor's oil and gas fields also helped drive the gains.
Brent <LCOc1> prices were up 2% at $40.1 a barrel and U.S. West
Texas Intermediate <CLc1> added 2.2% to $37.9 a barrel.
The dollar was little changed as investors awaited news about U.S.
Trump's health and developments in fiscal aid talks in Washington.
The dollar index <=USD> was last down less than 0.1% on the day at
93.722.
Yields on benchmark 10-year Treasuries <US10YT=RR> rose to 0.7088%
and the yield curve <US2US10=TWEB> steepened slightly, signalling
investors felt comfortable taking on more risk.
But euro zone bond yields edged lower on concerns about possible new
restrictions to fight the coronavirus.
The French government has announced new restrictions, closing bars
for two weeks. Other countries across Europe are also weighing up
more measures.
Gold <XAU=>, which is often bought during times of uncertainty, fell
0.35% to $1,892.1, highlighting increased risk appetite.
(Reporting by Danilo Masoni in Milan, additional reporting by
Stanley White in Tokyo; editing by Larry King)
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