05 October 2020

US Stocks Infected as Trump Tests Covid-19 Positive

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News shaping
the markets today

     

What’s happening: US stocks closed lower on Friday following news of President Donald Trump testing positive for the novel coronavirus.

What happened: With just a few weeks left for the US presidential election, Trump’s diagnosis and quarantine led to heightened uncertainty.

Meanwhile, the disappointing headline NFP (nonfarm payroll) figure for September fuelled further concerns, although there was some positive news in the report.

Why it matters: Donald Trump testing covid-19 positive has upended the US presidential campaign and cast a cloud over the November 3 presidential election. The latest development has also put Trump in the spotlight for the way the pandemic was handled and for his casual response while the country topped the charts in number of infections and deaths.

Meanwhile, the NFP report did not lift investor spirits, with the US adding only 661,000 new jobs in September, representing the lowest monthly increase in jobs since the reopening of the economy post lockdown. There was some good news though, as the unemployment rate fell to 7.9%, its lowest level during the pandemic.

Sentiment also remained subdued in the absence of any progress related to fresh fiscal stimulus to help the country recover from the coronavirus crisis.

The Dow Jones index slipped 0.5% to end Friday’s session at 27,682.81, while the S&P 500 lost 1% to reach 3,348.44. Tech stocks led the downturn on Friday, resulting in a 2.2% decline in the Nasdaq 100 to 11,075.02.

Tesla’s stock tumbled more than 7% after the electric vehicle maker reported its latest sales figures. Shares of Apple and Amazon plummeted around 3% each. Walmart’s shares lost around 2% after the retailer announced plans to sell its UK chain Asda.

Despite the steep decline on Friday, Wall Street ended the week with gains. The Dow Jones index rose 1.9%, while the S&P 500 and Nasdaq 100 added 1.5% each.

What to watch: Investors await a basket of economic reports from the US, including services PMI, composite PMI, and ISM non-manufacturing PMI.

The IHS Markit services PMI is expected to decline to 54.6 in September, versus a 17-month high reading of 55.0 in the earlier month. The composite PMI is expected to edge lower to 54.4 in September, from the previous month’s reading of 54.6. Analysts expect the ISM non-manufacturing PMI to decline to 56.3 in September, from 56.9 in August.

Markets will continue to keep an eye on developments around the new coronavirus relief package.

The Markets Today

     

Gold will be in focus today, after closing lower in the previous session.

Context: Gold prices settled lower on Friday despite President Trump and his wife testing positive for covid-19.

Details: News of Trump testing positive for covid-19 couldn’t have come at a worse time, with the US presidential elections around the corner. The development triggered heightened concerns over possible delays to the November 3 election.

Some market experts pointed out that the news could hurt Trump’s election campaign and benefit Joe Biden, who is already the frontrunner in the polls.

Gold initially rose on Trump testing positive but soon gave up gains as the news did not cause a sell-off in the US stock market. Although equity markets moved lower on Friday, they closed the session way off their worst levels.

After rising 1.1% in the previous trading session, December gold declined 0.5% to close at $1,907.60 an ounce on Friday. December silver also slipped by 0.9% to settle at $24.029 an ounce, after a 3.2% gain on Thursday.

Both gold and silver notched gains last week as the US dollar remained under pressure, sending the ICE US dollar index down by around 0.9%. For the week, the yellow metal gained 2.2%, while the white metal rose 4.1%.

What to watch: Markets will focus on the US dollar, which is expected to provide a direction for gold this week. An agreement on the US government’s fiscal stimulus package could also weaken the greenback and boost gold prices. Gold traded lower by 0.4% to $1,900 in the Asian session, suggesting downside in today’s trading.

Other Markets: European indices closed mostly higher on Friday, with the FTSE 100 and French 40 up 0.39% and 0.02%, respectively, while the German DAX 30 closed lower by 0.33%.

Support & Resistances
for Today

     

market snapshot

     

Futures at 0400 (GMT)

What else to watch today

     

Italy’s services PMI, France’s services PMI, composite PMI and retail sales, Germany’s services PMI and composite PMI, Eurozone’s services PMI, composite PMI and retail trade, UK’s new car registrations, services PMI and composite PMI, Spain's consumer confidence, Mexico’s consumer confidence, Brazil’s services PMI and composite PMI as well as Russia’s consumer confidence.