What Trump’s coronavirus diagnosis could mean for markets

U.S. President Donald Trump confirmed early Friday that he had tested positive for coronavirus, in an announcement that looks likely to spark volatility across global markets.

The president revealed on Twitter in the early hours that he and first lady Melania Trump had contracted Covid-19, just two hours after revealing that close aide Hope Hicks had tested positive.

Trump added: “We will begin our quarantine and recovery process immediately. We will get through this TOGETHER!”

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Dow futures plunged more than 450 points on the news and were down by 355 points as of 3:10 a.m. ET, while stock markets in Asia backtracked sharply. European stocks now look set to fall at the open.

Jeff Henriksen, co-founder and CEO of Thorpe Abbotts Capital, said the news would thrust Covid-19 back into the spotlight for investors, upsetting the dueling narratives of Covid as a “slow disaster” versus the belief that the U.S. is emerging out of the crisis into a strong recovery.

“Those kind of narratives have been playing out over the last three months and you can see it in how some days you will see more growth-oriented companies — companies that are deemed to do well in any kind of world whatever happens to Covid — versus companies that need a recovery do well,” Henriksen told CNBC’s “Squawk Box Europe” Friday morning.

Henriksen added that the announcement would heighten existing political uncertainty around the U.S. election on November 3, another key risk event for markets, and called the president’s positive test a “game changer” for market behavior in the short term.

“I think that you will see probably the tech sector continue to hold up pretty well, and I would think that some of the more cyclical names that require a recovery are probably going to not benefit,” he said.

He added that Trump’s diagnosis would focus investors’ minds on the coronavirus pandemic once again.

“It really brings into stark reality that we are potentially going into … a second wave. President Trump getting this really highlights that in a way that I think it will focus attention back on the virus and the effects it will have,” Henriksen said.

“I think that narrative is really going to be driving market behavior going forward for the near future.”

Gold traded higher on news of the Trump’s diagnosis, while in forex markets, investors also looked to safe havens, with the dollar index and Japanese yen rising. Meanwhile oil extended losses with Brent crude trading around 3% lower at 2.45 a.m. ET.

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