Global equity markets slumped and investors piled into gold and the Japanese yen on Friday after US President Donald Trump tested positive for the coronavirus, adding to market uncertainty just 32 days before the US election.
Mr Trump's bombshell announcement spurred risk-off moves among investors already concerned about an elusive coronavirus relief package aimed at bolstering a US economy that has lost steam, as seen by slowing jobs growth in the September payrolls data.
Gold posted its best week in eight even after paring gains, while the yen advanced sharply before also retreating a bit. Yields on the 10-year US Treasury note rose slightly, stuck in a narrow trading range it has held for three weeks.
How Americans feel about the pandemic when they vote on November 3 could determine the election's outcome, and that is highly unusual, said Michael Arone, chief investment strategist at State Street Global Advisors in Boston.
"Today's news demonstrates a bit of a weakness in terms of the Trump re-election campaign," he said. "The range of outcomes has expanded and some of the more extreme outcomes have increased in probability, and markets certainly don't like that."
Mr Trump is experiencing mild symptoms but will keep working after testing positive, administration officials said.
He was later moved to a military hospital for treatment, a White House official said, as his administration and election campaign scrambled to adjust to an extraordinary twist in his turbulent presidency.
The main US stock indexes fell but regional ones in Europe ended slightly higher after an initial sell-off on Mr Trump's news. The FTSEurofirst 300 index rose 0.22 per cent to 1,405.35 and the STOXX Europe 600 added 0.25 per cent to 362.69.
MSCI's benchmark for global equity markets fell 0.69 per cent to 564.07, while its emerging markets index fell 0.29 per cent.
On Wall Street, the Dow Jones Industrial Average fell 0.48 per cent. The S&P 500 lost 0.96 per cent and the Nasdaq Composite dropped 2.22 per cent, with market leaders Apple, Microsoft and Amazon the heaviest drags.
How long risk-aversion will last depends on the extent of the infection within the White House, said Francois Savary, chief investment officer at Swiss wealth manager Prime Partners.
"It will weigh on the market today and early next week but will not induce a long-lasting correction if the infection is contained to Trump," he said.
The Labour Department's closely watched employment report on Friday was the last before the presidential election.
September's employment gains were the smallest since the jobs recovery started in May and left the US labour market a long way from recouping the 22.2 million jobs lost in March and April, indicating slower growth heading into the fourth quarter.
US nonfarm payrolls increased by 661,000 jobs last month, below consensus expectations of 850,000, leading to mostly negative reaction by economists.
But both Mr Arone and Steven Ricchiuto, US chief economist at Mizuho Securities in New York, said the loss of government jobs, mostly seasonal in education, pulled numbers lower while the private sector's gains were above overall expectations.
"The net result is the seasonal factors pulled down the state and local portion, very, very dramatically, in particular in the education area," Mr Ricchiuto said. "The private sector component, however, continues to improve at a healthy pace."
The government lost more than 200,000 jobs, Mr Arone said.
"Those job losses on the government side are real, don't get me wrong. But overall the private sector seems to be hanging in there pretty well," he said.
Mr Trump said on Twitter late on Thursday that he and first lady Melania Trump were going into quarantine after an aide tested positive for the virus, triggering a rise in the dollar and the yen. The dollar index rose 0.128 per cent, with the euro down 0.31 per cent to $1.1711 (Dh4.29). A couple of hours later, Mr Trump tweeted that he and his wife had tested positive.
The Japanese yen strengthened 0.15 per cent versus the greenback at 105.37 per dollar.
The Australian dollar, which serves as a liquid proxy for risk assets, slipped 0.23 per cent.
Germany's benchmark 10-year bond traded 0.2 basis points lower at -0.539 per cent.
Gold pared early gains to turn lower as stocks pared losses.
"If more members of the US government's senior leadership are diagnosed positive, gold could be set for an extended rally," said Jeffrey Halley, a senior market analyst at Oanda.
Spot gold prices fell 0.20 per cent to $1,901.27 an ounce. US gold futures settled down 0.5 per cent at $1,907.60.
