It's a dangerous time to make predictions. Just when you think you've seen it all, you have another think coming...
The stock market downturn in Asia that I anticipated last Friday has not come about here on Monday. Over the weekend it appears that President Donald Trump has been recovering from the virus, at least enough to go on an ill-advised joyride.
His apparent recuperation has removed some of the instability from the market. Stocks around Asia are posting gains, most notably the S&P/ASX 200 in Sydney, where Australian stocks have advanced 2.6%.
Australian investors are awaiting the 2020 government budget, which Treasurer Josh Frydenberg is scheduled to deliver on Tuesday. The budget is likely to include additional stimulus and a personal tax cut.
In Tokyo, the broad Topix index closed up 1.7%. Fujitsu FJTSY is still investigating the hardware failure of its Arrowhead system that caused the entire Tokyo Stock Exchange to shut down for all of Thursday's trade.
Word of Trump's illness broke early in the afternoon on Friday in Asia. But with stock markets closed on Friday in Hong Kong, India, South Korea and Taiwan for holidays, Monday is the first chance many investors have had to respond.
Stock markets remain closed in mainland China as part of the National Day "Golden Week." Trading in Shanghai and Shenzhen will resume on Friday.
In Hong Kong, the Hang Seng was up 1.4% in late-afternoon trading. South Korean stocks, similarly, closed up 1.3%, with Taiwan edging up 0.3% for the day. In India, the Sensex moved 1.0% higher early in the afternoon.
The yen and the U.S. dollar, both safe-haven currencies when investors look to shed risk, have weakened on Monday.
Trump's improved health at least reassures the market that U.S. politics can go back to their regular divided, polarized and chaotic self, rather than moving into the sheer unknown. S&P 500 futures are up 0.6% in Asian trade.
But it is not like markets, or Trump's health, are in the clear. Doctors warn that sudden downturns in the health of apparently recovered patients do happen. With his publicity stunt drive to wave to well-wishers outside Walter Reed military medical center, Trump again ignored medical advice that would see symptomatic patients isolated in quarantine. Trump is sure to seek to be discharged as quickly as possible, perhaps as early as today.
U.S. Secretary of State Mike Pompeo, who is fourth in line to assume the duties of president should President Trump become incapacitated, is cutting short his trip to Asia, the subtext being Trump's condition. Pompeo will continue with his visit to Japan, which began Sunday and concludes on Tuesday, but has crossed South Korea and Mongolia off the agenda.
Pompeo says he will be back in Asia later this month, likely with a visit to India. He is due on Tuesday to meet with the "Quad" foreign ministers of the United States, Japan, India and Australia. Containing China's rising militarism in Asia, with frequent buzzing of Taiwan's airspace by Chinese jets and bombers, not to mention direct conflict with India high in the Himalayas, is sure to be on the agenda.
China's largest chipmaker, Semiconductor Manufacturing International Corp. HK:0981, saw its shares fall 5.4% by late afternoon in Hong Kong trading. SMIC warned in a Hong Kong stock exchange filing on Sunday that some of the company's suppliers have received letters from the U.S. government warning of sanctions against the company.
SMIC says it has "undertaken preliminary exchanges" with the U.S. Department of Commerce and its Bureau of Industry and Security. The letters tell its suppliers that they will need to apply for an export license for every attempt to sell equipment, accessories and raw materials to SMIC. Those restrictions may have "potential material adverse effects" on the company's future production and operations, it says.
SMIC, which is majority state-owned even though it is listed, is central to China's attempts to build a domestic semiconductor chip industry. But analysts say it is years behind larger rivals such as Taiwan Semiconductor Manufacturing Co. (TSM) , the world's largest contract chip manufacturer, which has cut off supply of its products to the Chinese telecom Huawei Technologies after Huawei was slapped with U.S. sanctions.
It's unclear how the new curbs on SMIC will affect Qualcomm (QCOM) , a major customer of the Chinese company. Qualcomm also owns a minority stake in SMIC's research subsidiary.
SMIC shares dropped 3.9% in Hong Kong trade last Monday after the U.S. Commerce Department imposed export restrictions based on the potential use of SMIC chips by the Chinese military.
The Commerce Department started requiring U.S. companies to win approval for an individual license for each time they export goods to SMIC. It stated that shipments to the Chinese company "may pose an unacceptable risk of diversion to a military end use" in the People's Republic of China.