Markets

Trump’s corona infection does not burden the stock market

D.he German stock market held up well on Monday morning. After a friendly opening with a premium of around 1 percent, the German standard value index was last around 0.4 percent at 12,745 points.

Declining political uncertainty in connection with the corona infection of American President Donald Trump is cited as the reason for the surcharges. Although there were contradicting information about Trump’s health over the weekend, a doctor promised an early discharge from the clinic.

With the president’s improved state of health, the mood on the trading floor is also improving, wrote market analyst Milan Cutkovic from the Axi trading company. The uncertainty remains high. The buying mood of investors should therefore be limited.

Meanwhile, there are doubts that the President’s infection had any significant impact on prices. Neil Wilson, chief market analyst at Markets.com, said some had declared prices falling too quickly.

Although the American S&P 500 index fell by 1 percent on Friday, it closed 0.25 percentage points above the daily low and that could just as well have been a consequence of the moderate labor market report. In addition, the broad market closed 1.5 percent higher.

It seems much more important that the markets continue to bet that another Corona stimulus package will be passed. On Sunday, the spokeswoman for the demo cards, Nancy Pelosi, said the parties were making progress. As long as the state of health of the president does not deteriorate massively, all of this should be seen as a noise.

The historical reactions to comparable incidents have also been rather cautious on the stock exchanges. The S&P 500 index fell only slightly on the day of the assassination attempt on Ronald Reagan in 1981. The attack on John F. Kennedy on a Friday dropped the market by almost 3 percent. On the following Monday, however, the market made up almost all of the losses.

There is already uncertainty about choice

In both cases, however, there was certainty again early on, which is not the case in the case of Trump’s infection, but above all because it raises questions about the progress of the election campaign and possibly the election date. And usually the stock markets mostly don’t like uncertainty.

However, there is already a certain amount of uncertainty regarding the choice: “For the financial markets it is important that there will be a recognized winner on election evening or at least within a few days after the election. But there are considerable doubts about that, ”writes Ingrid Szeiler, Raiffeisen KAG’s investment director.

However, the stock markets have shown a comparatively high level of resistance to political events for years – the initial reactions to the Brexit decision or the election of Trump in 2016 were very short-term in nature, because the markets were more towards the central banks and especially in the Corona -Crisis pay attention to fiscal policy. Political influences should not be overestimated, especially with regard to the medium-term outlook, says Szeiler. The election will pass and sooner or later the United States will have a president and a fiscal package.

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