Trump’s COVID-19 diagnosis sends ASX investors fleeing
The Australian sharemarket plunged in the final hour of trade on news President Donald Trump and his wife Melania had contracted the coronavirus one month out from the US election.
The market dropped 50 points in seven minutes following the news and finished 81.4 points, or 1.4 per cent lower at 5791.5 – the lowest close in more than a week and also the market’s worst weekly loss since April.
Meanwhile, the Aussie dollar dipped from 71.60 US cents to 71.33 US cents in the wake of the news, but edged back to 71.55 US cents after the close.
Friday’s fall mirrored nosediving US futures markets, which briefly dipped more than 2 per cent and were pointing to heavy losses for Wall Street traders in Friday’s week-ending session. Oil prices tumbled more than 3 per cent.
A late-night tweet from the President confirmed the COVID-19 diagnosis after one of his closest aides, Hope Hicks, earlier tested positive and forced Trump into quarantine.
Local markets were already subdued when the news came through, though had shown signs of improvement on news of a travel bubble being created with New Zealand.
The relaxed – albeit one-way – restrictions from October 16 will allow New Zealanders from non-hotspots to visit NSW and the Northern Territory. The news boosted travel-adjacent firms including Qantas, Air New Zealand, both Sydney and Auckland airports, and travel agencies Flight Centre, Webjet, Corporate Travel and Helloworld.
All ASX sectors ultimately ended in the red with the struggling energy sector faring the worst in a 4 per cent dive. Gold and silver prices ticked higher as their safe-haven appeal rose.
Tribeca portfolio manager Jun-Bei Liu said the Trump development added another layer of uncertainty in an extremely volatile period for US politics.
“People just have so many questions,” she said. “Can Trump campaign? Does the election get delayed? What about Biden? They were in the room for two hours together (at the presidential debate) so does he have it?”
“I think ultimately we’ll find a way through. On Monday we’ll see more reaction to the news but then people will step back and look at the underlying fundamentals.”
JPMorgan Asset management global markets analyst Kerry Craig said news of Trump’s illness ultimately dominated the day but he added that Friday’s fall could have been worse as several Asian markets are on holiday.
“It was pretty close to the end of the day so a little hard for it to have too much of an impact… I think we’re going to see a lot more movement when US markets open,” Mr Craig said.
“The story for us is how we react on Monday after we see what happens in the US and Europe.”
“There’s still a wide range of outcomes that could happen from here. We just don’t know. I would say that it doesn’t necessarily mean a sustained selloff.”
The major banks and miners were depressed throughout the day in local trade while biotech CSL also sagged.
Stem cell firm Mesoblast was easily the market laggard, shedding more than $1 billion in value in a 37 per cent dive to $3.19 on a regulatory setback in the US.
The US Food and Drug Administration has demanded further evidence of the effectiveness of the firm’s flagship remestemcel-L treatment before granting approval.
Markets reporter for the SMH and The Age
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Source: Thanks smh.com