European equity markets are under pressure this morning, with the German index down more than 1 per cent on the day.
US President Trump announced this morning that he and First Lady Melania have tested positive for COVID-19, which triggered a sharp sell-off in stocks.
While markets have bounced back from the initial knee-jerk reaction, sentiment has turned somewhat sour and we could see a switch to risk-off in the near-term.
Milan Cutkovic, Market Analyst at Axi, said: “The effects of Trump catching the coronavirus on the upcoming election is difficult to assess at this point. He might only have mild symptoms and will be able to continue carrying out his duties.
“However, should his health deteriorate, the increased uncertainty would lead to a volatility spike and investors would likely rush into safe-havens.
“Meanwhile, UK Prime Minister Johnson signalled that he will intervene in the on-going Brexit negotiations and meet with EU Commission President Ursula von der Leyen on Saturday.
“The Brexit talks have reached a critical phase, and markets are reacting positively to this development, with the British Pound paring recent losses.
“There are still significant obstacles, but both parties seem to have recently stepped up efforts to reach a deal.”
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