Stock markets around the world moved lower on Friday after word that the U.S. president has contracted the coronavirus that causes COVID-19.
In New York, the Dow Jones Industrial Average, the broader S&P500 and the technology-focused Nasdaq were all down by about one per cent nearing midday. In Toronto, the TSX’s main index held up comparatively better, down 80 points, or about half a per cent.
News of Donald Trump’s positive test came out overnight Thursday, and the initial market reaction was sudden and sharp, with futures selling off sharply. But by the time the trading day opened on Friday, cooler heads were starting to prevail, as losses were pared.
“To say this potentially could be a big deal is an understatement,” Dutch financial services company Rabobank said in a commentary. “Anyway, everything now takes a back seat to the latest incredible twist in this U.S. election campaign.”
The so-called “fear gauge” of Wall Street, known as the VIX, rose five per cent to 29. The VIX rises during times of uncertainty and falls when things calm down. It peaked at more than 80 in March, as the pandemic first started.
Jobs numbers discouraging
Prior to the Trump news, the biggest expected news event of the day was set to be the monthly U.S. jobs number, which showed the world’s largest economy added 661,000 jobs last month. That’s down from 1.5 million added the previous month, and a discouraging sign that the economic recovery is running out of gas just as a second wave of the pandemic seems to be hitting in various places.
The unemployment rate declined to 7.9 per cent from 8.4 per cent mainly because people left the workforce, Scotiabank economist Derek Holt noted. At first blush it sounds like good news that the number of people who were on “temporary layoff” because of COVID-19 fell by more than a million, but “the issue is whether they all get called back or just get converted to permanent layoffs and whether they give up searching for work,” Holt said.
Just this week, Disney announced it is laying off 28,000 people at its various theme parks as demand for that sort of leisure activity hasn’t rebounded.
Word on Friday morning that Trump is experiencing “mild symptoms” from the virus added to the gloom and worry over the jobs report.
“The announcement has lobbed a monkey wrench into an already uncertain and volatile political environment, which not only includes the U.S. election campaign and upcoming debates, but also ongoing EU-U.K. trade talks,” said Colin Cieszynski, chief market strategist with SIA Wealth Management in Toronto.
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