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First trading day after confirmation of Trump’s crown
Fall to 0.96% on the New York Stock Exchange
“Investor sentiment remains due to the low mortality rate in recent years”
Donald Trump arrives at Walter Reed Army Hospital in Maryland, United States. Reuters Yonhap News
As the leader of the world’s largest economic powerhouse (United States President Donald Trump) became a patient with a new coronavirus infection (Corona 19), it has emerged as a huge variable in the global economy.
Major economic institutions predict that the impact of the market will vary greatly depending on the future illness of President Trump. While the presidential elections and additional economic stimulus measures are taking place, the current state of the president’s injunction is inevitably a huge burden on the market. In particular, in the financial market, where uncertainty is more reluctant, there is an atmosphere in which the worst-case scenario is prolonged health rather than some recovery or deterioration.
The immediate impact is less than in the past presidential absence.
The US Standard & Poor’s (S&P) 500 Index on the New York Stock Exchange on the 2nd, the first trading day after President Trump announced the confirmed Corona 19, fell 1.2% from the previous day, but since then it has reduced the drop to 0.96%. The Dow Jones Industrial Average fell 0.48% and the Nasdaq Composite Index fell 2.22%. The value of the US dollar, a safe asset, rose, but only 0.1%, and the rate of US Treasuries rose 0.02 percentage points (the price of government bonds fell).
This is evaluated as a modest impact compared to the immediate aftermath of the injunctions, such as the assassination of President Dwight Eisenhower (-6.6%) and the assassination of John Kennedy (-2.8%), etc.
Also, historically, the economic shocks from these events have recovered immediately. Deutsche Bank analyzed that “despite confirmation from President Trump, investor sentiment has held up as the recent death rate of the crown 19 has dropped considerably.”
“If the disease worsens, the impact of the financial market may increase.”
However, the uncertainty remains in the market. The New York Stock Exchange volatility index, which represents investor anxiety, rose 3.48% on Day 2. As the number of non-farm employees announced on the same day was below expectations, the question was raised. possibility of a “ delayed economic recovery ”. Why.
In this situation, if President Trump’s symptoms worsen, it could cause an obvious shock to the market. In particular, since President Trump was admitted to an army hospital on the 3rd, in the worst case scenario, the possibility of handing over presidential functions and presidential candidate positions to Vice President Mike Pence is raised. Deutsche Bank said: “Given the age and body type of President Trump, the possibility that Corona 19 is fatal cannot be ruled out, so in this case, the impact of the financial market will expand rapidly.”
Key to Impact of US Economic Stimulus Policy … Prospects for “Large-Scale Economic Resumption in Early Recovery”
The most important variable in the recent global economic and equity flow is whether the US has completed additional stimulus measures. The additional economic stimulus plan is the only ‘good news’ expected by the financial market amid the loss of resilience of the US economy due to the reproliferation of Corona 19. Depending on the outcome, the impact on the market could be greater than Trump’s health.
JPMorgan and Citibank expressed optimism, saying: “If President Trump’s symptoms worsen, it will form a bipartisan atmosphere of cooperation between Democrats and Republicans, who are currently facing off.” On the other hand, Mizuho Bank predicted that “the Democratic Party will become less cooperative with the passage of the economic stimulus bill with the victory of candidate Joseph Biden.”
On the other hand, if President Trump recovers quickly from Corona 19, the prospects are high that it will have a positive impact on the market. The Canadian TD Bank predicted that “if President Trump recovers early, he will strengthen measures to resume economic activities, highlighting the fact that Corona 19 can be overcome with the current medical system.” Additionally, President Trump’s approval rating also saw that there is room for the momentum of sympathetic public opinion.
What is the impact of the Korean economy? “You need to see the bullish dollar”
In Korea, President Trump’s confirmation of Corona 19 is paying attention to the possibility of increasing the won-dollar exchange rate (decrease in the value of the won) while fostering fear of uncertainty and a preference for safe assets for the moment.
However, the prevailing view is that the impact will not increase rapidly. According to the Bank of Korea, on day 2, on the overseas difference settlement futures (NDF) exchange market, the won weakened slightly (-0.3%, 1,167 won per dollar), and the rate Interest rate on foreign bonds used to borrow money from abroad only increased by 0.004 percentage points. This means that foreign investor sentiment has contracted to some extent, but the fluctuation was not large.
An official with the foreign exchange authority said: “We are closely watching the impact of the confirmation of President Trump’s crown19 on the exchange rate and financial markets.”
Hyunwoo in reporter [email protected]
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