The global markets and the US stock futures incurred losses on Friday after investor sentiment wobbled over the implications of President Donald Trump’s positive test for the coronavirus.
Hours after Trump tweeted his condition, S&P 500 (SPX) futures were down 1.7 percent and Nasdaq (COMP) futures were down 2.3 percent. Dow (INDU) futures were down 445 points, or 1.6 percent, roughly matching their initial move lower after.
“Tonight, @FLOTUS and I tested positive for COVID-19. We will begin our quarantine and recovery process immediately,” Trump tweeted. “We will get through this TOGETHER!”
While the stock markets in Hong Kong, mainland China and South Korea were closed for public holidays, stocks in Asia Pacific dipped on the news.
According to data from the Bloomberg terminal, Japan’s Nikkei 225 finished down 0.7 percent, while Australia’s S&P/ASX 200 fell 1.39 percent.
European stocks were lower at the close of the market, with the FTSE 100 (UKX) dropping 0.35 percent in London, while France’s CAC 40 (CAC40) shed 0.37 percent and Germany’s DAX (DAX) declined 0.84 percent.
“Trump’s positive coronavirus test is now a key focus for markets largely because it is expected to affect the government’s approach to totally reopening the economy,” Ayorinde Akinloye, a research analyst at CSL Stockbrokers Limited, said, adding that the news also “comes on the heels of rising cases in many states that have started reopening over the past weeks”.
Aside from Trump’s condition, there are wider issues the market is concerned about including the deadlock in negotiations between the house and US economic adviser on the US$2.2tn stimulus bill as well as the jobs market.
Market analysts, however, do not see a direct impact of Trump’s condition on the Nigerian stock market as the overriding issues around FX remain major concerns for most foreign investors.
“Despite the seeking turmoil in developed markets, emerging markets like Nigeria would always be considered riskier. The FX pressures we are facing further worsens their sentiments, thus I don’t see any inflow of FPI funds coming in,” a Lagos-based stock market analyst said.
While noting several challenges faced by investors, Oscar Onyema, CEO, Nigerian Stock Exchange (NSE), explained at the recent ‘Investment and Capital Market Digital Dialogue’ by BusinessDay that policies around unification of exchange rate, resolution of the country’s FX liquidity crisis as well as naira stability would boost both domestic and foreign investors’ confidence in the market as well as in government commitment to economic stability.
Grappling with dollar crisis caused by the double whammy of the coronavirus pandemic and a deep plunge in prices of crude oil, the country’s biggest earner, Africa’s biggest economy for the first time in more than four years could not attract any foreign investor to invest in the Nigerian bond as a move to ration dollars heightened investors’ fear in the economy.
There were no subscribers to the country’s bond instruments in the second quarter of 2020, according to capital importation data by the National Bureau of Statistics.
While the COVID-19 pandemic exacerbated foreign portfolio flight to safety, one of the factors that intensified the pressures on Nigeria’s foreign reserve and exchange rate, Onyema said local investors surprisingly rose to the challenge in sustaining equities market performance.
“The low yield environment has positioned the equities market as a credible investment option for domestic institutional and retail investors,” Onyema said.
Analysis of NSE data shows that domestic investors have accounted for almost 60 percent of the trading activities in 2020 compared to the average of 51 percent in the last four years.
The NSE All-Share Index closed in green on Friday as it appreciated by 0.57 percent as at market close for the week ended October 2 2020.
