RISK AVERSION SWEEPS STOCK MARKETS AS TRUMP IS DOWNED BY COVID

A wave of risk aversion swept markets on Friday after US President Donald Trump said he and his wife had tested positive for COVID-19 and will isolate, weeks ahead of the elections, Tom Arnold and Elizabeth Howcroft reported for Reuters. 

US stock futures fell on the news and Treasury yields dipped. Analysts said the initial risk-off moves were a knee-jerk reaction. As European markets opened, the move in U.S. stock futures pulled back slightly. At 0735 GMT, S&P 500 futures were down 1%. Futures for the tech-heavy Nasdaq fell 1.2%. European shares opened lower. At 0736, the STOXX 600 was down 0.5% .STOXX and London's FTSE 100 was down 0.7% .FTSE, already recovering from their initial losses. 

The MSCI world equity index, which tracks shares in 49 countries, was down 0.2% at 0736 GMT. Trump’s exposure could cause a new wave of market volatility as investors braced for the presidential election in November. How long the risk-averse moves will last depends on the extent of the infection within the White House, said Francois Savary, chief investment officer at Swiss wealth manager Prime Partners. 

“We may have to wait until the end of the weekend for more clarity on the situation,” he said. “The reaction has been a bit excessive with US stock futures. It doesn’t mean the US administration is not able to function.”

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