Global markets retreat after Trump tests positive for Covid-19 – as it happened

Kalyeena Makortoff

from on 2020-10-02 13:56 (#58Q6A)

Rolling coverage of the latest economic and financial news, as the US president confirmed he had Covid-19

2.55pm BST

2.32pm BST

US stocks have tumbled at start of trading, as investors try to dump any risk following Trump's Covid diagnoses and the disappointing US jobs report.

Here's how US stocks are trading at the open:

2.25pm BST

UK chancellor Rishi Sunak has been answering questions via a live stream on LinkedIn, and here are some highlights:

We're actively looking at what a version of that might be, that we could put in place...that will provide that intensive support to find new opportunities for those who have been unemployed for a long time, so stay tuned."

2.04pm BST

Drilling down into some of the US labour stats, leisure, hospitality and retail are still suffering heavily due to the Covid-19 crisis.

According to the US Bureau of Labour Statistics, employment in leisure and hospitality increased by 318,000 in September, with almost 200,000 or two-thirds of the gain occurring in food services and drinking establishments.

1.56pm BST

The combination of the Trump Covid news and the lower-than-expected US non-farm numbers have pushed US futures even lower:

US Opening Calls:#DOW 27349 -1.71%#SPX 3322 -1.75%#NASDAQ 11323 -2.24%#RUSSELL 1502 -2.01%#FANG 5377 -2.45%#IGOpeningCall pic.twitter.com/sx6oDMmAKw

1.49pm BST

We are still down more jobs during the pandemic than we lost peak-to-trough in the 2008 financial crisis: (total NFP: 1990-today) pic.twitter.com/YkWwBaoM01

1.43pm BST

About half of the jobs lost in the early months after the coronavirus hit the US have now been recovered.

But the recovery in the US jobs market has been uneven, disproportionately benefitting white men while young people, women, Latino and Black Americans have continued to struggle to make up lost ground, my colleagues Dominic Rushe and Michael Sainato write.

1.38pm BST

Average US earnings, meanwhile rose 0.1% on a month-on-month basis in September, less than the Reuters forecast for a 0.2% rise.

That compares to a 0.3% rise in August (having been revised down from 0.4%).

1.35pm BST

More from the US jobs report: The US unemployment rate fell from 8.4% in August to 7.9% in September.

That is lower than consensus estimates for a reading of 8.2%.

#Jobsday unemployment rate falls by 0.5 pp to 7.9 but employment to population ratio rises just 0.1 pp as 695,000 people leave the labor force

1.31pm BST

US non-farm payrolls have come in at 661k for the month of September.

That compares to a Reuters poll forecasting 850k and August's tally, which has been revised up from 1.371m to 1.489m.

1.28pm BST

US futures have pared some losses on news that US vice president Mike Pence has tested negative for Covid-19. Dow futures are now down around 337 points or 1.22%.

But let's see what the jobs report holds.

News of Pence negative test helped lift Dow futures a bit. https://t.co/4lrmWniTu4

1.09pm BST

30 minutes til the jobs report

It's time for the September US jobs report, even if Trump's Covid-19 test threatens to overshadowing the upcoming data.

President Trump will be hoping for a decent number in order to make the point that the US economy is continuing to recover from its Covid shock, in line with last months August report which continued the trend of a slow a recovery in the US jobs market, with the unemployment rate falling to 8.4%, and its lowest level since the post lockdown spike to 14.7% in April.

While this is welcome, we can't ignore the fact that the US labour market looks a radically different beast to the one we saw earlier in the year. We can't even be sure that the unemployment rate is an accurate reflection of what is going on around the US as a whole.

12.47pm BST

Boris Johnson's spokesperson and German chancellor Angela Merkel have commented on Brexit talks, but surprise, surprise: there's been no breakthrough

12.36pm BST

Oil prices are now at three and a half month low.

Brent crude is down around 4% at $39.27 per barrel. That's about 20 cents lower than this morning.

12.21pm BST

European equities have pared some losses, but all major indices are still solidly in the red:

News that US President Trump has tested positive for COVID-19 must be worrying at a personal level, as it would be for anyone. Markets (being impersonal) will focus on whether this affects the election outcome or public health policy.

The future presidential debates may not happen; these were not seen as especially significant.

12.10pm BST

Chancellor Rishi Sunak has weighed into the Asda deal, according to Reuters, saying it's great to see Asda returning to majority UK ownership for the first time in two decades today.

11.57am BST

My colleague Zoe Wood has more on the takeover of Asda by the billionaire Issa brothers.

11.50am BST

European stock markets slid on Friday after Donald Trump announced that he had tested positive for the coronavirus just over a month before the US presidential election.

Every major stock market index in Europe fell after the news broke, following falls in Asia, as investors moved money away from perceived riskier assets. The FTSE 100 in London dropped by 0.6% to about 5,486 points in morning trading, while the Europe-wide Stoxx 600 index lost 0.3%.

11.39am BST

The flight to safe haven assets has driven down bond yields, which move inversely to prices and fall when demand for bonds rises.

Case in point, the yield on the benchmark US 10-year Treasury bond fell as low as 0.653% this morning before experiencing a slight recovery to 0.661%

11.15am BST

According to the takeover announcement, Asda will continue to be headed up by chief executive Roger Burnley.

The billionaire Issa brothers and TDR have also committed to investing more than 1bn in Asda over the the next three years, which they say will further strengthen the business and its supply chain."

The Blackburn-born brothers, who bought their first petrol station in Bury, Greater Manchester, in 2001, each own a quarter of EG Group, which is thought to be worth as much as 10bn after a series of acquisitions including forecourt groups in the US, Little Chef roadside cafes and a major Kentucky Fried Chicken franchise in the UK.

TDR owns the other half of the group, which was formed in 2016 by the merger of the Issas' Euro Garages with TDR's European Forecourt Retail Group and now employs 50,000 people across almost 6,000 sites in the UK, US, Europe and Australia. Sales at the group soared by two-thirds to 20bn (18.1bn) in 2019, according to the latest accounts filed at Companies House, but the company made a pre-tax loss of 82m after servicing 8.4bn of debts.

11.06am BST

News flash: Asda owner Walmart has confirmed that the Issa brothers and TDR Capital are to buy the grocery chain in a deal that values the company at 6.8bn.

Walmart will still hold a stake in the business, but the team will take a majority ownership stake in the business, which will continue to be headquartered in Leeds.

Asda will remain headquartered in Leeds, from where it built its heritage and roots, and will continue to be a significant contributor to the UK economy and tax base.

The business will continue to be led by Roger Burnley who will form part of Asda's Board alongside representatives appointed by the Issa brothers, TDR Capital and Walmart.

10.43am BST

Bert Colijn, a senior eurozone economist at ING, says Germany's cut to VAT was patly to blame for the further drop in eurozone inflation, as were falling energy prices.

However, the decline in services inflation - likely linked to the impact of social distancing - is the biggest cause for concern, he says:

Perhaps the most worrying decline in the inflation rate comes from services inflation, which usually shows very little volatility and is a large component of the core inflation index.

Services inflation was 1.6% in February and has dropped to just 0.5% in September. We find that this is predominantly due to large drops in prices for services related to social distancing, indicating that the coronavirus has had a significant deflationary impact.

10.40am BST

Catching up on EU data out this morning, the eurozone has suffered its second straight month of deflation.

The EU's statistics agency said flash estimates showed Eurozone inflation was in negative territory at an annual rate of -0.3%.

10.27am BST

Don't panic. That's the message from AJ Bell investment director Russ Mould this morning.

Mould says investors are trying to understand what this means for the presidential election. And while markets may be on the back foot, we are still far from the large scale losses experienced at the start of the pandemic in February and March.

Donald Trump catching coronavirus has put the markets in a mild state of disarray.

First, the President of the United States becoming ill creates a sense of instability for markets in general.

In the grand scheme of things, the scale of these declines isn't as dramatic compared to how the markets behaved in February and March as the pandemic unfolded. It certainly isn't time to panic.

10.20am BST

US futures have taken a notable hit on the Trump Covid news, as investors offload riskier stocks in favour of gold and government bonds.

S&P 500 futures are down 36 points or 1% and Nasdaq futures have tumbled 188 points or 1.6%.

9.51am BST

Turning momentarily to the UK's Covid response, the National Crime Agency says the government-backed Bounce Back Loan Scheme (BBLS) for small businesses seeking is being exploited - including by criminals.

According to Reuters, the NCA has provided banks with red flag indicators" to help them detect fraudulent applications.

9.34am BST

The bets are off - at least on the Betfair website.

Bookmaker Betfair has suspended betting on US presidential election odds after Trump's positive Covid-19 diagnosis.

9.10am BST

Amazon has revealed that almost 20,000 of its workers in the US have contracted Covid-19 after months of demands for public disclosure from activists, my colleague Jasper Jolly writes.

The US tech company has been one of the biggest corporate winners during the pandemic, with people across the world switching to online shopping during lockdowns. However, Amazon has faced criticism from some labour campaigners who alleged that the company put employees in danger by keeping warehouses open.

COVID-19 Testing Update: We've already launched and are ramping quickly, conducting thousands of tests a day and growing to 50,000 tests a day across 650 sites by November as part of our effort to keep our front-line employees safe. https://t.co/QMuJbRcfmM

9.01am BST

There's a short update from AstraZeneca, which has been working on an experimental Covid-19 vaccine with the University of Oxford.

The British drugmaker said that clinical trials for the vaccine have resumed in Japan, but that it is still in talks with regulators over data needed to restart trials in the US, which is one of the countries where the trials had been put on pause.

AstraZeneca continues to work with the Food and Drug Administration (FDA) to facilitate review of the information needed to make a decision regarding resumption of the US trial. The safety of trial participants is of paramount importance and we are committed to upholding the highest standards of conduct in clinical trials.

8.32am BST

Oil took one of the biggest hits after the Trump Covid announcement this morning, with prices falling as much as 3.2% to $39.48 per barrel.

Brent crude prices were already in negative territory amid fears that a $2.2tn Covid relief plan approved by the US House of Representatives appeared to be doomed by objections by the Republican-controlled US Senate. Without more support for the US economy, traders fear consumer demand will decline further.

8.04am BST

Traders are wasting no time in ditching European stocks. Here's how the major indices are faring at the open:

7.58am BST

Stephen Innes, chief global markets strategist at AXI, explains the market swing over Trump's Covid diagnosis succinctly: Dump all risk, find the best haven, and reevaluate later is the primary modus operandi."

Traders are trying to figure out what this means for the US presidential election campaign, and whether they should be hedging for spending plans put forward by Democratic presidential candidate Joe Biden. Innes explains:

The risk-off reaction to Trump's positive Covid-19 test feels like the last of the Biden pricing is getting done. The quarantine will mean he misses three swing state rallies - with critical Florida among them. It also means the next debate will need to be shifted.

Currently, oil is the worst performer, down just over 2%, followed by the mini down 1.8%. Interestingly, Treasury yields haven't risen..

There are plenty of pictures from Trump and others, including Vice President Pence, talking without masks. With senior White House staff operating in a very tight bubble, the next stages will be the test results for everyone on the Ohio trip.

I suspect there are emergency contingency meetings underway now with could lather the market with stimulus.

7.42am BST

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Global markets are on the back foot this morning after US president Donald Trump and first lady Melania Trump both tested positive for Covid-19. It came after Trump's aide Hope Hicks - who travelled with him to the presidential debate and a Minnesota rally earlier this week - tested positive on Thursday.

Tonight, @FLOTUS and I tested positive for COVID-19. We will begin our quarantine and recovery process immediately. We will get through this TOGETHER!

Pre- and current market sessions worldwide focussing on the upcoming US #jobs report are now dealing with the news that President @realDonaldTrump and @FLOTUS have tested positive for #Covid
Dow futures are down 500 points in response to a new set of questions about what's ahead. pic.twitter.com/0EuoxSjveh

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