October 23, 2020

Global shares and oil drop after Donald Trump tests positive for COVID-19, sparking safe-haven rush

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Melania Trump Donald Trump
US President Donald Trump and First Lady Melania Trump in the White House on July 7, 2020.

  • US stock futures tumbled 2% after President Donald Trump tested positive for COVID-19.
  • Gold and US Treasuries rallied, as investors sought stability in safe-haven assets, while oil and cryptocurrencies dropped sharply.
  • “Stock futures are certainly going down at time of writing, however. Risk is off there,” Rabobank strategists said in a note.
  • Visit Business Insider’s homepage for more stories.

Global equity markets and oil plunged on Friday, while gold spiked after US president Donald Trump said he and his wife had tested positive for coronavirus. 

US futures on the S&P 500, Dow Jones and Nasdaq 100 were last down by almost 2%, indicating a likely steep drop when trading begins on Wall Street later. 

Asia-Pacific benchmark indices dropped as investors piled out of risk-linked assets, including even the US dollar.

They moved to the likes of gold and US Treasuries, leaving Japan’s Nikkei down 0.8% and Sydney’s S&P/ASX 200 down nearly 1.5%. 

Trump, who faced off against Democratic rival Joe Biden in a televised debate on Tuesday, got tested for the disease along with his wife, Melania, after his close confidant and White House counselor, Hope Hicks, tested positive earlier this week.

“It seems that the knee-jerk reaction was first to sell USD a little instead, at least until markets can work out exactly how this potentially plays out. Stock futures are certainly going down at time of writing, however. Risk is off there,” Rabobank strategists said in a note.

S&P E-mini futures on October 2
Intraday chart of S&P E-mini futures

The dollar index traded 0.1% up on the day around 93.81, having fallen back from an earlier intraday high of 94.03.

Gold was last down 0.2% on the day at $1,909 an ounce, having bounced off an earlier low of $1,895.2 an ounce as the news of Trump’s positive test broke. The yield on the 10-year US Treasury fell 2 basis points on the day to 0.659%, set for its biggest one-day decline in nearly two weeks.

Oil, one of the most sensitive commodities to geopolitics and the economy, plunged by nearly 4%. Brent crude futures were last down 3.3% at $$39.59 a barrel, while WTI futures fell 3.5% to $37.41 a barrel. 

“A short while ago it was announced that Donald Trump tested positive for COVID-19, so no doubt he will quarantine. This put pressure on US index futures and European indices are called lower,” CMC Markets analyst David Madden said.

European indices were called to open in the red at the start of trading at 03:00 am ET. The FTSE 100, the DAX and the CAC 40 are all expected to open between 1.2-1.3% lower.

Highlighting the investor flight from risk was a drop in cryptocurrencies, with Bitcoin down by more than 3% on the day, while Ethereum fell by 5%.