World markets steadied on Tuesday as investors shifted their focus to corporate earnings and economic data following Joe Biden’s exit from the US presidential race. Biden’s departure has cast doubt on a Republican victory under Donald Trump, potentially leading investors to reconsider trades betting on increased US fiscal and inflationary pressures.
Vice President Kamala Harris is set to campaign in the battleground state of Wisconsin on Tuesday as the Democrats’ presumed nominee.
The pan-European STOXX index edged up 0.1%, while U.S. futures dipped 0.2% after the S&P 500 rose 1.1% on Monday. The U.S. dollar, which gained on Monday, remained unchanged against a basket of currencies on Tuesday.
“Markets appear to be in a bit of a holding pattern this morning having now digested the weekend news flow of Biden quitting the presidential race,” said Michael Brown, senior strategist at broker Pepperstone in London. Investors will now focus on whether polls show a closer race against Trump compared to when Biden was the Democratic candidate, Brown added.
“You’d expect that, were polls to narrow, and the race be seen as a closer contest, volatility to tick higher, and perhaps some downside creep into the equity space too,” he noted.
Despite this, Asian markets remained supported on Tuesday, with Taiwan’s benchmark index snapping five sessions of losses, rising over 2%. This was part of a broader rebound in chipmaking shares, recovering some of the $100 billion in market value lost by Taiwan’s TSMC, the world’s largest contract chipmaker, over the previous few sessions. TSMC had come under pressure following Trump’s comments that Taiwan should pay for its defence and accusations that the island was stealing American chip business.
Investor focus is now firmly on earnings, with Tesla and Alphabet due to report after the session closes in New York, marking the beginning of the earnings season for the “Magnificent Seven” megacap group of stocks.
