Trump hospitalisation: Uncertainty looms over US stock market
NEW YORK (US) – US investors are scrutinising how a potential worsening of President Donald Trump’s health could affect asset prices in coming weeks. This comes in the wake of the president being admitted to hospital after testing positive for novel coronavirus.
Markets have been optimistic with hopes of a breakthrough in discussions among lawmakers on a stimulus package taking the edge off a stock market selloff on Friday.
S&P 500 lost than 1% and safe-have assets witnessed limited demand. News of the president’s hospitalisation came after trading ended on Friday.
With less than a month before the presidential election on November 3, many investors are wary of the health of Trump. They are of the opinion that deterioration of his health could roil a stock market that witnessed its worst monthly performance recently after its selloff in March. It could also trigger turbulence in other assets.
If Trump’s health is on a tailspin, then there will be “too much uncertainty in the situation for the markets just to shrug it off,” said Willie Delwiche, investment strategist at Baird.
Investors are examining different scenarios. If the president recovers, it will bolster his image as a fighter. On the other hand, if his condition worsens, or if he dies, it stokes uncertainty and dries up risk appetites in the markets.
Some investors feel that if the uncertainty continues, it would make technology and momentum stocks, which led this year’s rally, vulnerable to a selloff. Nasdaq fell more than 2% on Friday.
“If people … get nervous right now, probably it manifests itself in crowded trades like tech and mega-cap being unwound a bit,” Delwiche said