Almost every political action has an instant market reaction. The world’s financial markets faced a turbulent opening on Monday, following the assassination attempt on former President Donald Trump, that took place on Saturday. The event is poised to have a significant impact on the global economy and, perhaps, influence the outcome of the November elections.
On Monday, global markets showed slight confusion at the beginning of trading, before risk appetite quickly took control of the price movement, paving the way for a wave of optimism.
The Dow Jones Industrial Average rose 211 points, or 0.5%, closing at an all-time high above 40,000. The S&P 500 and Nasdaq Composite also saw gains, increasing by 0.3% and 0.4% respectively. Nonetheless, the US dollar was unable to determine a clear direction since the beginning of the new week’s trading.
“The shooting… did not cause investors to flee to safe-haven assets such as the US dollar and US Treasury bonds. Instead, investors focused on what was behind the incident and what it might mean for the Republican presidential candidate’s election campaign,” said Mohamed Hashad, Chief Market Strategist at Noor Capital.
Trump was shot just after 6 pm Eastern Time during a campaign rally in Pennsylvania. He was hit on the right ear before falling to the ground under the protection of Secret Service personnel. Although the former US president has survived, one person was killed and two others critically injured during the attack, prompting both Trump and Biden to call for calm and unity amid concerns of rising political violence.
This positive market movement defied historical expectations, as previous assassination attempts on US political figures, as well as government changes, have usually caused market declines. However, two days after the event, the majority of analysts focused on the increased odds that Trump would win the next US general election.
“It is likely that the tragic impact that was expected to fall on the markets was greatly reduced because the Republican candidate survived the assassination attempt and appeared heroic immediately after the shooting, which may increase his popularity among voters,” Hashad added.
Once the focus was on Trump’s chances of winning over US President Joe Biden, positivity began to penetrate the markets, which was evident in the performance of US stock futures at the opening of the first trading day this week. Despite not achieving a noticeable rise, stock futures was able to avoid a decline.
“The recent increase in the odds of former president Trump winning the US presidential election in November should translate into an additional tailwind for cyclical sectors with high exposure to the domestic economy,” said Mathieu Racheter, Head of Equity Strategy Research at Julius Baer,
Following the shooting, Bitcoin rose by about 5.25%, confirming that investors in global financial markets in general – and digital currency markets in particular – favour Trump’s victory in the 2024 US presidential elections.
