Stock Markets Higher as Trump Returns to White House

Asian stocks at two-week high
October 5, 2020 Updated: October 5, 2020

SINGAPORE—Asia’s stock markets edged higher on Tuesday, cautiously adding to gains made with an improvement in U.S. President Donald Trump’s health, although bonds and the dollar nursed losses.

Trump returned to the White House on Monday after a three-night hospital stay for treatment for COVID-19 and said he felt “real good.”

“Don’t let it dominate your life,” Trump posted to Twitter. “We have developed, under the Trump Administration, some really great drugs & knowledge. I feel better than I did 20 years ago!”

S&P 500 futures traded steady early in the Asian session, after the best daily gain on the S&P 500 index in a month overnight. Oil held sharp overnight gains.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.2 percent to a two-week high. Japan’s Nikkei rose 0.4 percent. South Korea’s Kospi rose 0.6 percent and futures point to a positive open in Hong Kong.

Australia’s ASX 200 dipped 0.2 percent in early trade. China’s markets remain closed for a holiday.

“There’s some tentativeness,” said Michael McCarthy, chief market strategist at brokerage CMC Markets in Sydney, especially in Australia ahead of a central bank meeting at 0330 GMT followed by the government’s budget in the evening.

Asian markets on Monday unwound most of a Friday selloff in the wake of Trump’s COVID-19 diagnosis. With his improvement, Wall Street rallied sharply overnight with, energy, tech and healthcare stocks leading. The Dow rose 1.7 percent, the S&P 500 1.8 percent and the Nasdaq 2.3 percent.

Bond markets also joined in, with the safe-haven asset being sold—especially at the long end—in line with the optimistic mood. The yield on U.S. 30-year government bonds rose 10 basis points to a four month high of 1.5930 percent.

Benchmark 10-year yields hit a more than five-week high, and held there in early Asian trade at 0.7784 percent.

“Improved near-term stimulus prospects and then potentially bigger deficits under a Biden presidency that has the benefit of clean sweep, are behind the yield gains here,” said Ray Attrill, head of FX strategy at National Australia Bank in Sydney.

In currency markets, the dollar was under pressure on other majors apart from the yen, since higher yields can often draw flows from Japan.

The yen last traded steady at 105.73 per dollar. The risk-sensitive Australian and New Zealand dollars edged ahead, with the Aussie last up 0.1 percent at $0.7191 and the kiwi at $0.6651.

The euro was just below a two-week high hit overnight at $1.1789.

Oil jumped more than 5 percent overnight and held there in Asia, supported by optimism surrounding Trump’s health and a supply squeeze owing to a strike at Norwegian oilfields.

U.S. crude was last steady at $39.25. Brent crude rose 0.2 percent to $41.36. Gold was steady at $1,912 an ounce.

By Tom Westbrook