Roundup of markets: Stocks fall while gold and yen rise as Trump tests positive for COVID-19

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Donald Trump confirmed on Twitter that he and his wife Melania are positive for COVID-19 infection
Analysts now see Biden as the clear favorite to win the presidential election
Gold, yen and dollar are soaring, while stocks, crypto and commodities are plummeting on Trump news

Volatile financial markets welcomed European traders and investors this morning after US President Donald Trump and his wife Melania tested positive for coronavirus and went into quarantine.

Trump tests positive

Donald Trump confirmed on Twitter that he and his wife Melania are positive for COVID 19 infection.

“We will begin quarantine and recovery immediately. We will get through this TOGETHER,” Trump said.

Trump is 74 years old and is at high risk for Covid-19 due to his age and overweight. Trump has not had any serious health problems during his presidency, but he has not had a healthy diet or regular exercise.

More than 200,000 Americans have died from the virus, mostly at an advanced age and with pre-existing health problems. Trump is known for rarely wearing a mask and for ridiculing others for it, especially Democratic presidential candidate Joe Biden.

In the first presidential debate three days ago, Trump pulled a mask out of his pocket and said “I wear masks when I need them. I wear masks when I need them,” and then made fun of Biden for wearing face masks regularly.

“I don’t wear masks like he does. Every time you see him, he has a mask. He could talk 200 feet away from them, and he shows up with the biggest mask I’ve ever seen,” Trump said.

Health experts have repeatedly said that wearing face masks is essential to stop the spread of the deadly virus. Joe Biden struck Trump for his poor response to the virus.

In recent weeks, the president has held several rallies, including thousands of people in the run-up to the upcoming elections, ignoring warnings from health experts who have strongly discouraged large crowd events.

Last night Trump predicted that the end of the pandemic was near, just before the news that his chief advisor, Hope Hicks, had tested positive for Covid-19.

Hicks traveled with Trump on September 29 and 30. It is expected that the news of the positive Trump test will dramatically affect the presidential race. Trump’s new activity plan was released today and does not include his planned trip to Florida.

On the other hand, Biden is expected to campaign in Michigan today, and these are the two swing states that could decide the outcome of the race.

“Trump has fallen behind Biden, and he has clearly failed to narrow the gap after the first debate … I suspect that the markets will tend to believe that Biden is likely to win the election,” said Naoya Oshikubo, senior economist at Sumitomo Mitsui Trust Asset Management.

The President has regularly run campaigns across the US to win the race against Biden, who has avoided crowd rallies. On the other hand, Trump has praised his campaign rallies with large crowds of people who also have no cover and do not maintain social distance.

U.S. future collapses

After the news that Trump was diagnosed with COVID 19 infection, investors rested on Friday to reduce their stock holdings. U.S. equity futures fell while their European counterparts opened lower.

S&P Futures Daily Chart (TradingView)

“It will weigh on the market today and early next week, but will not trigger a prolonged correction if the infection is contained on Trump,” said Francois Savary, Chief Investment Officer at Swiss asset manager Prime Partners.

The U.S. benchmark index S&P 500 Futures is in the red with 1.06% three hours before the opening of trading in New York.

Crude oil prices fall

Crude oil prices extended yesterday’s losses to over 4% on Friday. In addition, the fact that there is still no agreement on the new stimulus package added to investors’ concerns about demand.

Crude Oil Daily Chart (TradingView)

“It was already a weak market and this event has added to the uncertainty and given people the opportunity to say, ‘You know what, I’m taking some risk off the table,” said Lachlan Shaw, head of commodities research at the National Australia Bank in Melbourne.

Crude oil is now trading at $37.01, down 4.01% a day to extend the weekly losses. A four-month low is $36.15 and is seen as the next target for sellers.

Gold price up slightly

In contrast to crude oil prices, spot prices for gold rose this morning to compensate for the losses overnight and trade 0.1% in the green zone. The yellow metal is now trading above $1,900/oz again.

Daily Gold Spot Price Chart (TradingView)

“It will now be a wait-and-see game where gold will attract some bids. It is certainly not a market where I see any appetite to sell gold,” said Ole Hansen, Saxo Bank analyst.

The intraday resistance line is at $1,922/oz.

USD/JPY crashes due to risk concerns

USD/JPY, a key benchmark index for general risk sentiment in the forex market, plummeted to below $105 in the news this morning. The EUR also fell against the Dollar, but to a lesser extent. As expected, the commodity currencies (AUD, NZD and CAD) all lost against the Dollar.

USD/JPY Daily Chart (Trading View)

“The President of the United States has a disease that kills people. People are therefore risk-free,” said Chris Weston, research director at Melbourne brokerage firm Pepperstone.

The USD/JPY is now trading at $105.12, down 0.36% from that day. The $104.20 level is an important target for sellers on the down side.

Crypto currency market follows stocks down

The crypto currency market fell over 3% today, reaching a valuation of $320 billion. A downward movement stopped at the 200 DMA near $320 billion as buyers try to defend this important level.

Crypto currency market cap (TradingView)

The price of Bitcoin (BTC) is trading over 2% below the daily price as sellers are trying to force a daily close below the 200 DMA at $10,538. The Ethereum (ETH) price does not perform as well as the BTC price, as it has fallen about 5%.

Summary

Financial markets, with the exception of gold, yen and dollars, fell on Friday morning after U.S. President Donald Trump and his wife Melania tested positive for Covid 19 infection.

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