TOKYO (Reuters) – Japan’s government upgraded its assessment of the economy on Wednesday for the first time since May 2019 after a key indicator improved for August, pointing to a gradual recovery from the impact of the coronavirus pandemic.

The index of coincident economic indicators, which measures a range of data including factory output, employment and retail sales numbers, rose a preliminary 1.1 points from the previous month to 79.4 in August, the Cabinet Office said on Wednesday.

Based on the index data, the Cabinet Office said that showed economic activity in the world’s third-largest economy had stopped contracting, an upgrade from its previous view that the economy was “worsening” in July.

“There is a possibility that the index will grow further this year as there is room for exports, notably auto shipments, and consumer spending to recover,” said Koya Miyamae, senior economist at SMBC Nikko Securities.

“The economy overall has been picking up after hitting the bottom around May and a gradual recovery is expected to continue.”

The data offers some relief for new Prime Minister Yoshihide Suga, who has pledged to contain the coronavirus outbreak and revive Japan’s battered economy.

The report follows the release last month of more upbeat economic outlook from the Bank of Japan, suggesting that no immediate expansion of stimulus was needed to combat the coronavirus pandemic.

Also on Wednesday, the Cabinet Office reported the index of leading economic indicators, which is a gauge of the economy a few months ahead and is compiled using data such as job offers and consumer sentiment, grew 2.1 points to 88.8 from July.

Still, analysts expect the pace of recovery may not be strong enough to recoup losses caused by the coronavirus outbreak, underscoring the challenge for policymakers to revive the economy.

Japan’s economy sank deeper into

Markets are reacting relatively calmly to the news that President Donald Trump and First Lady Melania Trump have tested positive for Covid-19. The S&P 500 is off 0.8%, Dow Jones Industrial Average is down a mere 0.3%, although the tech-heavy Nasdaq is down more than 2% on the news.

The question now is how will markets perform over the next several days and weeks. The answer may lie in how bad a case of coronavirus President Trump ends up with.

Could Trump’s Covid-19 Diagnosis Interrupt the Recovery?

The news upends an already chaotic few months. In some ways, the economy has strengthened remarkably since the onslaught of the coronavirus pandemic, with home sales and consumer confidence growing more robust, and unemployment dropping from almost 15% in the spring to 7.9% in September as employers added 661,000 jobs.

Nevertheless, a recent uptick in cases throughout Europe and in parts of the United States caused stock market participants to get antsy. The S&P 500 dropped about 7% from its high on September 2 to September 29, per CFRA chief investment strategist Sam Stovall. 

“Despite the solid economic backdrop, equity investors increasingly sound like Oliver Twist, stating the need for more,” Stovall noted.

This isn’t the more they had in mind.

Historical Market Reactions to Presidential Health

When the health of the most powerful person in the world is compromised, investors tend to sell—at least in the heat of the moment.

For instance, the DJIA went from up 6 points before President Reagan was shot in March 1981 to down almost 3 points after news of his injury became known. Stocks also briefly dropped after President John F. Kennedy was assassinated in 1961. Markets were already in chaos when President William McKinley was assassinated in 1901, although the impact of his