The initial political reaction has been sympathy for the President to get better, given his modest underlying health problems—the White House has been operating on a 7 day quarantine period, though the CDC advies 10 days. This is important as UK Boris Johnson saw a very large bounce in public approval ratings after he fell ill in early April, see Figure 1—though Johnson was in hospital and ICU, whereas Brazil Jair Bolsonaro did not when he tested positive. However, the illness could provide one factor that provides support for the President.
However, the negative is that Trump has campaigned on COVID being passed the worst, with political commentators fearful that Trump testing positive will hurt the President stance on COVID. Additionally, Trump illness before an election is different from Johnson, as questions will be asked about his long-term health. Questions have also been raised whether the October 15 presidential debate should go ahead, while some section of the Democratic camp have argued should not go ahead after the debacle surrounding thefirst debate.
For financial markets, the initial knee jerk reaction has been increased uncertainty, but the impact in the coming days will be a function of health reports from the president’s doctors and approval rating polls.
However, at least for the next week Trump campaign activities are restricted and this risks losing momentum, given the gap nationally but also more crucially in swing states for the electoral college. On balance, we maintain the view that Joe Biden will likely win the U.S. presidential race.