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Biden’s decision to withdraw from the 2024 race sends shockwaves through global markets. Discover how stocks, oil, and crypto are responding.
Recent political developments have made the US presidential elections highly interesting, as Biden has withdrawn from endorsing Kamila Harris as a Democratic Nominee.
Such political events are having a direct impact on stocks worldwide. Michael Brown, a senior strategist at Pepperstone, expects high volatility, with a possible drop in the dollar’s strength. The president of Quantum Strategy, David Roche, agreed with the upcoming headwinds and added that Harris’ nomination increases the odds of Trump winning the race.?
Market Indices Reaction
So far, the market reaction has been stable:
- Bloomberg dollar index dropped only 0.2%.
- The yields of 10-year treasuries dropped by two basis points.
- Nasdaq 100 futures jumped by 0.9%.
- Europe Stoxx 600 saw an increase of 1%.
- S&P contracts gained 0.5%
- MSCI world index rose 0.1%.?
When we look at the European market, we come across some positive moves on July 22:?
- Germany’s DAX increased 0.8%.
- FTSE in London gained 0.5%.
- CAC in Paris added 0.8%.
As for Asian stocks, the dynamics are the following:?
- Japan’s Nikkei was down by 1.2% at 38,599 on July 23.?
- Hang Seng index in Hong Kong jumped 1.3% to 17,635.
Emerging markets reaction | Source: Yahoo Finance
Commodities Market Reaction
Oil markets also remained relatively calm after the announcement. Despite the recent escalation in the Middle East, prices remain subdued.
In the medium to longer run, Trump’s presidency should be bullish for oil, as he has always backed the sector. This is also evident by the fact that around $7.3 million of donations to his campaign came from various players in the industry.?
Some analysts also think that this might be beneficial for gold and silver in the long run.
Peter Earle of the American Institute for Economic Research evoked the relationship between high uncertainty and people’s rush to safe havens. This can result in investors and people hedging their bets in gold and silver, which might further increase the price of these metals, which have already touched recent highs.?
Shares of stocks related to Trump, such as the Trump Media & Technology Group, rose 2.8%, while Phunware jumped 1.4%. However, analysts agree that increased volatility is ahead.
Marc Ostwald, Chief Economist at ADM ISI, said in a comment to Techopedia:
“it injects a lot of uncertainty into the electoral equation. Initially, it begs whether the Dems can unite behind Kamala, the donors certainly appear to be. Then there is the point that she may not win. This could impact the Congressional vote. We could see House and Senate divided up, which has big implications regarding what Trump could get passed”.?
Kurt Cagle, Editor at The Cagle Report, told Techopedia:
“Kamala Harris is likely, for the most part, to continue the policies that Biden put into place in the last four years, and will likely continue with the existing agenda, with a few key changes. Biden effectively tamed inflation in the country at the cost of slowing the economy.?On the other hand, Trump has made it clear that he wants to see tariffs used as a primary tool in international economic warfare, with a definite protectionist mindset – all of these political dynamics will have serious effects on US stocks.”
Crypto Reaction to Biden’s Withdrawal
The impact on Crypto markets also felt the reverberations of this significant development as Bitcoin briefly surged past $68,000 with the broader market registering a 1.25% increase.
Around $67 million of long positions in the crypto market were liquidated within 30 minutes of Biden’s announcement to withdraw from the results, as Bitcoin fell to $65,880 only to recover to a 24-hour high.?
Just in:
?? Joe Biden’s withdrawal from the 2024 presidential race led to a massive #crypto dip! ??
In just 30 minutes, nearly $67M in leveraged long positions were liquidated due to a 2.3% drop in #Bitcoin’s price.
?? Liquidations occurred between 5:30 pm and 6:00 pm UTC on… pic.twitter.com/5Es6m2xWG2
— 24h.bz (@24hbz) July 23, 2024
The current week will be very important for markets, and we can expect some swings as investors look out for the Fed’s preferred inflation gauge, PCE index, and a flurry of quarterly earnings for the Magnificent Seven. There are multiple other stocks that investors need to keep an eye on as Trump gathers more support.
