The positive test reading for the leader of the world’s largest economy adds more uncertainty to investors' worries. US stock futures and Asian shares fell in the wake of the news. Future contracts for S&P 500 and Dow industrials lost 1.9 percent.
US stock futures and Asian shares have fallen after President Donald Trump said he and first lady Melania Trump tested positive for the new coronavirus.
The future contracts for both the S&P 500 and the Dow industrials lost 1.9 percent. Oil prices also slipped on Friday.
Trump tweeted news of his test results just hours after the White House announced that senior aide Hope Hicks had come down with the virus after travelling with the president several times this week.
Tonight, @FLOTUS and I tested positive for COVID-19. We will begin our quarantine and recovery process immediately. We will get through this TOGETHER!— Donald J. Trump (@realDonaldTrump) October 2, 2020
“To say this potentially could be a big deal is an understatement,” Rabobank said in a commentary. “Anyway, everything now takes a backseat to the latest incredible twist in this US election campaign.”
Trading in Asia was thin, with markets in Shanghai and Hong Kong closed. The Nikkei 225 index shed strong early gains, losing 0.8 percent to 22,999.75 after the Tokyo Stock Exchange resumed trading following an all-day outage due to a technical failure.
Reports that the Japanese government is preparing new stimulus measures to help the economy recover from a prolonged downturn worsened by the coronavirus pandemic provided only a temporary lift. Prices fell further after Trump's announcement.
Australia’s benchmark S&P/ASX 200 slipped 1 percent to 5,815.90. Shares in Singapore, Thailand and Indonesia also fell.
UK stops taking bets on US elections
Bookmakers in Britain suspended betting on the outcome of the US election on Friday.
Ladbrokes, Irish-based Paddy Power as well as online gambling exchange Betfair were among firms to halt all betting on the November 3 contest.
"We have temporarily taken the US election markets down as we await further updates - this is standard procedure and we wish Donald and Melania Trump well," a spokeswoman for Lad brokes said in a statement.
Betfair had put Democratic challenger Joe Biden's probability of winning at 60 percent on Wednesday after the first presidential debate. Biden's odds rose from 56 percent before the debate. Trump's fell to 40 percent.
Betting on politics is illegal in the United States but permitted and common in Britain.
Swinging US markets
On Thursday, the benchmark S&P 500 ended the day 0.5 percent higher, at 3,380.80, the Dow Jones Industrial Average rose 0.1 percent to 27,816.90 and the Nasdaq composite rose 1.4 percent to 11,326.51, as big tech-oriented stocks propped up the market, much as they have through the pandemic.
Such big swings have become typical recently, as investors handicap the chances of a deal on Capitol Hill to send more cash to Americans, restore jobless benefits for laid-off workers and deliver assistance to airlines and other industries hit particularly hard by the pandemic.
House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin continued their talks on Thursday, but no breakthrough arrived before stock trading ended on Wall Street. Instead, there were only hopes that were periodically raised and dashed as government officials took turns criticising each other.
“Things remain fluid; we all know what is at stake if this deal does not go through before markets sundown, it is unlikely to be pretty ugly," Stephen Innes of Axi said in a commentary.
US employment figures
Beyond potential political developments, investors will be watching for job figures due out on Friday.
Data released on Thursday painted a mixed picture for the US economy, with one report showing the number of workers filing for unemployment benefits last week fell to 837,000 from 873,000. That was less than economists expected, but incredibly high compared with before the pandemic.
Consumer spending was higher than forecast in August, which is key because it’s the main driver of the US economy. But personal incomes weakened by more than expected last month, and growth in the country's manufacturing sector also fell short of forecasts.
With airlines and other major companies announcing layoffs and furloughs, another round of economic aid from Congress is seen as crucial.
Treasury Secretary Stephen Mnuchin and House Speaker Nancy Pelosi have worked effectively together in the past, helping to drive through the previous economic rescue approved by Congress in March. But the country’s deepening partisan divide has stymied progress, with the presidential election only about a month away.
The yield on the 10-year Treasury fell to 0.66 percent from 0.67 percent late on Thursday.
US benchmark crude lost $1.08 to $37.64 per barrel in electronic trading on the New York Mercantile Exchange. It gave up $1.50 to $38.72 on Thursday. Brent crude, the international standard, lost $1.05 to $39.88 per barrel.
The dollar weakened to 105.05 Japanese yen from 105.54 yen. The euro weakened to $1.1731 from $1.1747.