US Politics: Wild week for stocks as Biden surges and coronavirus spreads

Biden is now the frontrunner to face Trump in the election
Biden surged back into the Democratic presidential race on Super Tuesday
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It's been a chaotic and unpredictable week on Wall Street, with the markets swinging wildly in the wake of Super Tuesday and the escalation of coronavirus. Tradefair brings you the latest from US politics...

We are very much alive. And make no mistake about it, this campaign will send Donald Trump packing."

- Joe Biden

US stocks are having a tumultuous week, with Wall Street witnessing dramatic rises and falls off the back of Super Tuesday - which saw Joe Biden enjoy a dramatic resurgence in the race for the Democratic presidential nomination - and the accelerating spread of coronavirus in the US and elsewhere.

All of the country's major indexes have seen big shifts both up and down so far this week, with the Dow Jones Industrial Average swinging by 1,000 points or more twice in three days.

The Super Tuesday effect

Super Tuesday was a huge success for Biden, who previously appeared to be lagging behind in the contest to win the Democratic presidential nomination. The former vice-president regained his status as frontrunner in the race by winning ten of the 14 states voting, overtaking Vermont senator Bernie Sanders.

Biden said: "We are very much alive. And make no mistake about it, this campaign will send Donald Trump packing."

It now appears to be a two-horse race between Biden and Sanders, with Massachusetts senator Elizabeth Warren falling way behind in the delegate count and former New York mayor Michael Bloomberg suspending his campaign after a poor showing on Tuesday.

Minnesota senator Amy Klobuchar and former South Bend, Indiana mayor Pete Buttigieg had already stepped back and endorsed Biden.

The remaining candidates will continue to campaign in state primaries and caucuses over the coming months in an attempt to win 1,991 delegates - the number required to secure the Democratic presidential nomination.

As it stands, Biden has 584 delegates and Sanders has 509, but this will change when California - where Sanders is expected to win - declares its final vote tally.

Stock markets were boosted by Biden's strong performance on Super Tuesday, which alleviated concerns on Wall Street that Sanders - a far-left candidate - would cement his status as the favourite to take on Trump in November's presidential election.

The Dow ended the day 4.5% higher on Wednesday, having gained more than 1,100 points, while the S&P 500 surged by 4.2% and the Nasdaq Composite was up by 3.9%. These increases helped to offset the falls witnessed the previous day.

Coronavirus consequences

The coronavirus outbreak - which has now spread well beyond China and is taking its toll on Western economies and financial markets - was a key factor in the falls witnessed on the main US indexes earlier in the week.

Shortly after experiencing its worst week since the 2008 financial crisis, Wall Street saw further falls on Tuesday, despite efforts by the Federal Reserve to bolster the economy with a cut in the benchmark interest rate. The central bank reduced the rate by 50 basis points, citing the "evolving risks to economic activity" posed by the coronavirus outbreak.

The move came as a surprise to some analysts, with Richard Harris, chief executive of Port Shelter Investment Management, telling CNBC the economy is "nowhere near the sort of situation where the Fed should be acting like this".

He questioned why the Fed made this decision and why it decided to use some of its "sparse ammunition" to cut interest rates "very early in a crisis".

Trump has repeatedly urged the central bank to stimulate economic activity by reducing interest rates, but this week's change wasn't enough to satisfy the president, who called for "more easing and cutting".

Trump's response to coronavirus

The economic impact of the coronavirus outbreak on stocks and the economy will be a concern for the Trump administration as the president targets re-election in November. Trump had previously cited recent market highs as evidence of the strength of the economy during his time in office.

He has sought to play down the impact and consequences of the spread of the virus, assuring Americans this week that it's still safe to fly.

After a meeting with airline executives at the White House, Trump said: "At this moment we think we have it very much in hand."

But the government has faced criticism for its response to the outbreak, specifically in connection to a nationwide shortage of testing kits.

Trump blamed the problem on a decision made during Barack Obama's presidency, although it was unclear what decision he was referring to.

"The Obama administration made a decision on testing that turned out to be very detrimental to what we're doing, and we undid that decision a few days ago so that the testing can take place in a much more accurate and rapid fashion," the president told reporters.

Early signs suggest the concerns over coronavirus could continue to impact US markets on Thursday, with stock futures suggesting the Dow could open more than 500 points down.

In London, the FTSE 100 dropped by more than 1.7% on Thursday morning, while Frankfurt's DAX index was down by 1.8%.

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