US Equity Futures Higher on Diminished Political Risk Signals

Uncertainty shook the markets on Friday after Trump tested positive for Covid-19, raising questions about the functioning of the government, the election campaign and the Supreme Court nomination process if the president was sidelined. .

Stocks remain sensitive to any signals about Trump’s health, investors said. Doctors said the president’s condition was improving on Sunday, though they also noted that his blood oxygen level had dropped twice and that he was taking a steroid normally given to seriously ill Covid-19 patients. His medical team has said that he could be sent back to the White House on Monday, after days of conflicting information from doctors and advisers.

The optimistic assessment has “helped the risk appetite, but I would be more skeptical,” said Jane Foley, Rabobank’s head of currency strategy. “There has been a bit of confusion about what the doctors have said and going back and forth about her condition.”

Biden’s lead over the president also appears to have widened, according to a poll conducted by The Wall Street Journal and NBC News in the two days after the debate. That indicates that there may be less room for dispute over the results of the November elections, which would be welcomed by the markets. But opinions were sought before news emerged that Trump had tested positive for Covid-19.

“As people think about the idea that Biden will be president and the Democrats could sweep Congress, they are realizing that the impact on the stock market will be quite large given a probably greater fiscal stimulus,” said James McCormick, a strategist at NatWest Markets.

In recent weeks, markets have grown increasingly skeptical that Democrats and the White House will reach an agreement on the size and terms of the government’s next coronavirus relief spending package. Instead, many investors are trying to assess what Biden’s election victory might mean for the tax package and for issues like corporate taxes.

“People are beginning to question whether a Biden win would be totally negative for stocks,” McCormick said. “There are fiscal implications, but there are also some positive stimulus implications.”

Political uncertainty has caused trading upheaval in recent days and there are signs that the market turbulence will continue. The Cboe volatility index, an options-based gauge of investors’ expectations of market changes, is near its highest level in nearly a month.

Shares of Regeneron Pharmaceuticals rose 5.8% ahead of the opening bell in New York after the White House said Friday that the president received an eight-gram dose of Regeneron’s antibody drug cocktail as a precaution. .

MyoKardia shares jumped 58% pre-market after Bristol Myers Squibb said it will buy the biotech company in a $ 13.1 billion deal aimed at expanding the heart drug line of anti-drug powerhouse. Cancer.

Cineworld Group shares,

owned by Regal Entertainment Group, plunged nearly 44% in London after the second-largest US theater chain said it would close all of its locations across the country, after reopening in August, exacerbating the crisis driven by the pandemic facing the entertainment industry.

In bond markets, the benchmark 10-year US Treasury yield rose to 0.725%, from 0.694% on Friday.

In raw materials, Brent crude, the international energy benchmark, rose 3.5% to $ 40.63 a barrel.

Abroad, the Pancontinental Stoxx Europe 600 rose 0.7%.

The main Asian stock markets also recovered at the close of business. Japan’s Nikkei 225 was up 1.2%. Hong Kong’s Hang Seng Index advanced 1.3%. China’s Shanghai Composite Index was closed for the holidays.

The Institute for Supply Management survey of purchasing managers in the services sector, to be released at 10 am ET, is expected to show another expansion in US activity.

Write to Anna Isaac at [email protected]