S&P 500 Futures: Stocks to surge on Trump's discharge hopes, four reasons why a crash may follow


  • President Trump's doctors said he could be discharged from the hospital on Monday.
  • Stocks are set to rise in response to his improving condition.
  • A larger collapse in shares cannot be ruled out if Trump remains in the hospital.

"The president has continued to improve" – the message from President Donald Trump's physician on Sunday, is taken with a grain of salt after the confusion caused on Saturday due to contradicting statements from the White House. However, the announcement that Trump could be discharged on Monday has been making headlines around the world. 

Hopes that the president's COVID-19 episode could be short-lived provide some relief for markets, which fell on Friday after Trump tweeted out his positive coronavirus test. The president, 74-years old and overweight, is leading the world's most powerful country and is trailing behind in the polls. The dramatic turn in an already turbulent campaign has shocked the world and investors.

While S&P 500 futures may advance in Asia and in Europe, the move in American equities depends on Trump indeed leaving the Walter Reed hospital and showing up with his usual energy in the White House. There are reasons to doubt that will happen.

Four reasons to doubt the instant hopes

First, the doctors seemed evasive when talking about Trump's lung scans. Has he developed pneumonia? Hopefully, the answer is no, but the lack of transparency is worrying. 

Second,  Dr. Sean Conley, the president's doctor, finally acknowledged that Trump received oxygen – on Saturday he only insisted that the president is not on oxygen right now. That also casts doubts about his condition. Late on Saturday, Trump released a video of himself from the hospital to lay these concerns to rest. Another spell of oxygen cannot be ruled out.

Third, Trump is receiving significant medications, including dexamethasone, a steroid that the Center for Disease Control (CDC) recommends administering to patients with "severe and critical COVID-19." While medics may be trying to throw everything at Patient Number One, the usage of steroids – which also suppress fever – can be worrying. 

Fourth, according to Dr. Conley, days 7-10 are the most critical ones and Trump could only be in days 5-8 – depending on when he was infected. He was initially taken to the hospital on Friday due to an "abundance of precaution" and keeping him a few more days would seem only seem to be the minimum.

Conclusion

Markets tend to get ahead of themselves and could rise in the hopes that Trump leaves the hospital. However, there are reasons to be cautious on the president's condition, and if he stays for a few more days, it would disappoint investors and send stocks down.  

More 2020 Elections: How stocks, gold, dollar could move in four scenarios, nightmare one included

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended Content


Recommended Content

Editors’ Picks

EUR/USD stays pressured toward 1.0500, US PPI data next in focus

EUR/USD stays pressured toward 1.0500, US PPI data next in focus

EUR/USD remains heavy toward 1.0500 in the European session on Thursday, hanging at yearly lows. The Trump trades-driven unabated US Dollar demand and tarrifs threat weigh on the pair. Mixed Eurozone data fail to lift the Euro. Eyes turn to US PPI data and Fed Chair Powell. 

EUR/USD News
GBP/USD holds losses near 1.2650 on relentless US Dollar buying

GBP/USD holds losses near 1.2650 on relentless US Dollar buying

GBP/USD is holding losses while flirting with multi-month lows near 1.2650 in European trading on Thursday. The pair remains vulnerable amid a broadly firmer US Dollar and softer risk tone even as BoE policymakers stick to a cautious stance on policy. Speeches from Powell and Bailey are eyed. 

GBP/USD News
Gold price approaches 100-day SMA/50% Fibo. confluence amid sustained USD buying

Gold price approaches 100-day SMA/50% Fibo. confluence amid sustained USD buying

Gold price touches its lowest level since September 19, around $2,550 area during the early part of the European session on Thursday. The US Dollar buying remains unabated in the wake of optimism over the expected expansionary policies by US President-elect Donald Trump.

Gold News
XRP struggles near $0.7440, could still sustain rally after Robinhood listing

XRP struggles near $0.7440, could still sustain rally after Robinhood listing

Ripple's XRP is trading near $0.6900, down nearly 3% on Wednesday, as declining open interest could extend its price correction. However, other on-chain metrics point to a long-term bullish setup.

Read more
Trump vs CPI

Trump vs CPI

US CPI for October was exactly in line with expectations. The headline rate of CPI rose to 2.6% YoY from 2.4% YoY in September. The core rate remained steady at 3.3%. The detail of the report shows that the shelter index rose by 0.4% on the month, which accounted for 50% of the increase in all items on a monthly basis. 

Read more
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

Majors

Cryptocurrencies

Signatures