LONDON: Stock markets diverged on Tuesday (Oct 6) as investors dwelt on US election uncertainty after President Donald Trump returned to the White House following hospital treatment for COVID-19.
Traders reacted to Trump's discharge from hospital as political concerns persisted before the presidential vote on Nov 3.
The dollar rose against the euro but declined against the yen, while oil prices continued to win back ground from last week's heavy losses.
Global equities had rebounded on Monday on reports of Trump's improving health, while lawmakers in Congress appeared to edge towards agreeing on a new stimulus package.
"Today's reversal (in Europe) is just indicative of the fact that all is not as rosy as some want to believe," OANDA analyst Craig Erlam told AFP.
"This is still going to be a controversial, drawn-out election with the potential added uncertainty of a challenge to the result."
Erlam added: "There's a huge cloud of uncertainty hanging over the economy and markets right now."
Investors remain unclear over the status of a new US stimulus package that would help combat chronic fallout from the pandemic in the world's biggest economy, dealers said.
Analysts said Trump's positive test for COVID-19 could be the jolt US lawmakers needed to finally agree a deal.
Stimulus talks have revived with a series of mostly phone meetings between Treasury Secretary Steven Mnuchin and Democrat House leader Nancy Pelosi.
The speaker's deputy chief of staff Drew Hammill said the two planned to hold another call on Tuesday.
"As far as traders are concerned, talking is preferable to being in a stand-off and not engaging with each other," noted David Madden, analyst at CMC Markets UK.
Analysts are meanwhile pointing to polls showing that Democrat Joe Biden could beat Republican Trump in next month's vote.
"Trump has work to do in the battlegrounds to swing back in his favour," said Markets.com analyst Neil Wilson.
Polls put Biden between 10 and 14 points ahead nationally and leading in crucial swing states.