US president Donald Trump’s coronavirus diagnosis and three-day stint in hospital dominated headlines and market sentiment.

Schroders chief investment officer Johanna Kyrklund says stock markets have a ‘tendency to overreact’ to daily news around elections, while George Lagarias, chief economist at Mazars, says that for all the sensationalism around Trump’s health, unless it deteriorates rapidly it’s unlikely to have any material impact on risk assets like stocks.

The uncertainty over the outcome of the election, whether there will
be a peaceful transfer of power and the health of the president could result in continued volatility ahead of election day (3 Nov).

Markets fell sharply on  2 October when it was revealed Trump was admitted to hospital with Covid-19, with sentiment impacted by uncertainty over how the election would play out, and wider concerns about the impact of the leader of the world’s largest economy potentially being incapacitated.

News of Trump being discharged from hospital on 5 October saw the
S&P 500 surge 1.8%, Nasdaq 2.3% and Dow Jones 1.7%.

It seems investors also moved past the fact US job creation halved month-on-month in September with only 661,000 new jobs added, compared to 1.49 million in August and well below analyst expectations of 900,000 new jobs.

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