(Reuters) – Investors are speculating on how a potential deterioration in President Donald Trump’s health could affect property prices in the coming weeks, as U.S. Leader Kovid-19 has been admitted to hospital after being diagnosed.
So far, the markets have been relatively accurate: stock markets began selling on Friday in hopes of success in negotiations on a second stimulus package among U.S. lawmakers, with the S&P 500 losing less than 1% and so-called safe haven assets limited demand. News of Trump’s hospitalization at a military medical center outside Washington, where he was staying on Saturday, came after business ended on Friday.
Many investors are worried that Trump’s health will decline in less than a month before he goes to the polls on November 3. The stock market, which had a bad post-sell-off monthly performance in March, may see a rebound in the stock market. Other assets.
If the president’s health is at risk, Byrne’s investment strategist Willie Delwich said, “there is a lot of uncertainty in the situation in the markets to pull it off.”
The various results that investors have now envisioned from the rapid recovery have led to Trump’s image as a fighter dragged into illness or death, drying up uncertainty and risk appetite in the markets.
Should uncertainty persist, technology and dynamic stocks that have led to this year’s rally could be particularly sensitive to selling, some investors said. The tech-heavy Nasdaq fell more than 2% on Friday, doubling the S&P 500’s decline.
“If people … panic right now, they’re exposing themselves to noisy businesses like tech and mega-caps,” Delwich said.
Buying technology stocks was the market’s “densest” trade, according to a record of 0% of fund managers surveyed by Bofa Global Research last month.
The concentration of investors in large tech stocks has also raised concerns over their outsourced influence on moves in broader markets.
The top five companies in the US – Google Parent Alphabet, Amazon, Apple Plus, Facebook and Micro .ft – now account for about 25% of the S&P 500’s market capitalization, according to research firm Oxford Economics.
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With Trump’s diagnosis focused on financial stimulus negotiations in Washington and Washington, investors said the agreement on an aid package other than facing election-related uncertainty could act as a stabilizing force in the markets.
Nancy Pelosi, chairwoman of the Democrat U.S. delegation, said Friday that negotiations are ongoing, but she is awaiting a response from the White House on key areas.
Investors said the fresh stimulus could spur economic recovery from the effects of the epidemic, which would put millions of Americans out of work, and benefit economically sensitive companies whose stock performance has been low this year, investors said.
“In underweight stocks, we will use this volatility as an opportunity to increase equity because we feel we are in the early stages of economic recovery,” said Keith Lerner, chief market strategist at Truist / Suntrust Advisory. Said Keith Lerner.
Market action on Friday suggests that some investors may be in a position to announce stimulus in the midst of a sell-off.
The S&P 500 sectors, representing industrial and financial affairs, rallied 1.1% and 0.7%, respectively, while the broader index declined.
Despite concerns about Trump’s position, “the financial program is the biggest voice in the market,” said Arnim Holzer, macro and mutual defense strategist at EAB Investment Group.
Investors’ hedges against soft market swings over the past few months could soften Friday’s decline and reduce future volatility to some extent, said Christopher Stanton of hedge fund Sunrise Capital Partners LLC.
Despite Trump’s illness, futures on the Cobo Volatility Index continued to show expectations of elevated volatility after the Nov. 3 vote, which is consistent with election-fighting concerns.
If the Republican president has stepped up in recent weeks, he is nagging doubts about whether he will agree to hand over the key to the White House. During his first discussion with Democratic challenger JB Biden on Tuesday, Trump refused to commit to accepting the result, and reiterated his uncontrollable complaint that the mail-in ballot would lead to election fraud.
“If Trump is not feeling well … he will stop running for office,” said Michael Purvey, chief executive of Tulben Capital Advisors. But “the markets aren’t changing the way elections are contested right now.”
Reported by April Joner and Louis Kraskopf; Writing and additional reporting by Ira Iosebashvili; Edited by Paul Simao
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