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Morning Brief: Dow Jones Slumps, Dollar, Yen Rise on Trump Covid Results

Global stocks declined after Donald Trump confirmed that he had tested positive for Covid-19. In the United States, futures tied to the Dow Jones, S&P 500, and Nasdaq 100 are down by more than 1.60%. The Dow is down by more than 458 points. In Europe, DAX index, FTSE 100, and CAC 40 are also down by more than 1%. In Asia, the Nikkei 225 has fallen by more than 0.75%.

October surprise?

In a tweet, Donald Trump confirmed that he had contracted the Covid-19 illness. He also said that he and his wife will start the treatment process right away. Some now believe that this could be the October surprise, which is defined as a major event that happens before the election. These surprises tend to have a major impact on the outcome of the election.

The announcement that Trump had contracted the disease is sending shockwaves in the US and around the world. While Republicans have sent messages of compassion, some Democrats will continue to criticise the president for his handling of the pandemic.

Still, it is early to determine the main implication of the diagnosis in the upcoming election. This could be the reason why the Dow Jones and other indices have fallen.

However, another key aspect is that the diagnosis could reduce the likelihood of a new stimulus deal. Yesterday, Democrats on congress voted for a new stimulus deal worth about $2.2 trillion. With his diagnosis, there is a possibility that Republicans will not pass the bill.

The Dow Jones will later today react to the nonfarm payroll numbers from the United States. Analysts believe that the data will show that the economy added more than 840k jobs as the unemployment rate declined to 8.2%.

Separately, the US dollar and the Japanese yen rose as investors rushed to safety after the Trump illness. Other currencies like the euro and pound fell. In commodities, crude oil, natural gas, gold, and silver prices have also declined.

Dow Jones futures technical outlook

The daily chart shows that the Dow Jones futures turned sharply lower today after Trump revealed his illness. The index is trading at $27,375, which is lower than this week’s high of $28,147. The price has moved below the 25-day exponential moving average and is slightly above the 78.6% Fibonacci retracement level.

Therefore, the pair is likely to continue falling as bears aim for the next support at $27,000. However, there is also a possibility that the index will pare back these losses as investors fade the news.

Dow Jones Daily Chart

Dow Jones