Markets
Dollar Falls, Stocks Rise as Biden Drops Out of Presidential Race
Top line
U.S. markets rose modestly on Monday morning after President Joe Biden stepped down out of the presidential race and endorsed Vice President Kamala Harris over the weekend, after weeks of mounting pressure that fueled speculation on domestic, global and cryptocurrency markets, increasingly inclined to bet on a second victory for Donald Trump.
Markets reacted to Biden’s abandonment of the presidential race on Monday.
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Main aspects
US stock futures rose slightly after Biden told Americans it was time for him to “step aside”, with Dow Jones futures up 0.14%, S&P 500 futures up 0.39% and Nasdaq futures up 0.64% before markets opened early Monday morning.
THE dollar indexwhich measures the value of the greenback against foreign currencies used by U.S. trading partners, fell 0.16% to 104.22, a sign that the U.S. currency has weakened and its purchasing power has declined globally.
But US Treasury yields fallen—bond prices and yields are inversely proportional, with one falling while the other rises—a signal that investors may be moving away from “Trump Trade” bets that have taken into account Trump’s policies that could prove negative for government bonds now that the outcome of the election is less certain.
European stocks responded positively to market opening on Monday, with the European Stoxx 600 index up 0.92%, the German Dax index up 1.2%, the French CAC 40 up 1.16% and the UK’s flagship FTSE 100 index up 0.73%.
However, Asia-Pacific shares were mostly lower, with Japan’s benchmark Nikkei index down 1.16%, South Korea’s Kospi losing 1.14%, Australia’s ASX 200 down 0.5% and the Shanghai Composite index down 0.61% after China’s central bank cut interest rates following weaker-than-expected economic data from Beijing last week, although Hong Kong’s Hang Seng Index reversed course and rose 1.25%.
Bitcoin’s price remained relatively stable following Biden’s announcement, briefly rising above $68,000 before falling to around $67,400, with other major cryptocurrencies such as Ether, Dogecoin, Solana’s Sol, and Cardano’s Ada rising on Monday before paring gains.
Key context
Given the political and financial influence of the United States on the world stage, global markets understandably respond to the changing odds of who will occupy the White House next. The November election is expected to be close, but developments in recent weeks appear to have shifted the odds in Trump’s favor, particularly Biden’s poor debate performance and Trump’s survival of an assassination attempt, and markets have been answer consequently. This includes betting on higher bond yields and looking at some markets as Asian stocks and chip stocks as more risky.
Why Are Cryptocurrency Markets Reacting to the November Elections?
Cryptocurrency markets have rallied in line with Trump’s prospects of taking over the White House, which he has sought to to position oneself as a crypto-friendly candidate despite previous skepticismThe prospect of a Trump victory is also fueling optimism in the cryptocurrency market. Trump’s advocacy for cryptocurrencies, along with the addition of JD Vance to the list as his running mate, has made Trump a attractive candidate to Silicon Valley heavyweights eager to build and profit from the industry.
What to keep an eye on
The presidential election isn’t the only thing moving markets, and there are several developments in the coming weeks that are likely to create waves. The Federal Reserve is increasingly expected to cut interest rates, possibly in September, as inflation falls and is expected to hold a policy meeting in late July. The “Magnificent Seven” stocks (Alphabet, Amazon, Apple, Meta Platforms, Microsoft, NVIDIA and Tesla) dominate U.S. markets and also influence smaller companies, especially in the tech sector. Several of them are expected to report their second-quarter earnings next week, especially Tesla and Google parent Alphabet, and their performance could shake up tech stocks, with particular attention likely to be paid to how they have implemented artificial intelligence.
Further reading
ForbesTrump Media Stocks Soar, Bitcoin Soars Above $63,000 After Assassination AttemptBy Robert HartForbesTrump Says ‘All’ Bitcoin Mining Should Be in US in Latest Cryptocurrency ApproachBy Robert Hart
ForbesHarris Soars in Election Betting Markets, But Bookmakers Still Favor TrumpBy Siladitya RayForbesJoe Biden’s Letter to Americans: It’s Time to “Step Away”By Mary Whitfill RoeloffsForbesRoche Soars as Once-Daily Diet Pill Shows PromiseBy Robert Hart
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