The markets are waiting expectantly for the openings on Monday to see the possible repercussions that the political earthquake that took place this Sunday in USAafter the President Joe Bidenwho was highly questioned by both insiders and outsiders regarding his electoral suitability and his chances against the Former Republican President Donald Trumpwould decline his candidacy for re-election.
With the polls against him and in an attempt to turn the situation around, Biden stepped aside from his electoral race to support the nomination of the vice president, Kamala Harrisinstead. The news quickly resonated on Wall Street just days after Trump’s assassination attempt in Butler ( Pennsylvania).
According to some experts, Biden’s resignation could bring volatility to the markets, as investors prefer scenarios of stability and political predictability. Josh Thompson, CEO of Impact Health USA, assured GOBankingRates that the initial response could be a sharp drop in stocks due to coverage of potential risks.
Timothy Holland, financial analyst and chief investment officer at Orion said that this could be stimulating for the US economy and corporate profits, however, he understands that “the acceleration of economic growth could also boost inflation in the long term,” something that would force the Federal Reserve (Fed) to move from expected rate cuts in 2024 to rate hikes in 2025 or 2026.
However, other specialists believe that Biden’s departure could be beneficial for the stocks of some specific sectors, since Vice President Kamala Harris, who is emerging as Biden’s replacement, is also seen as a “weak” candidate compared to Trump, something that would allow “discounting a fiscal policy context that presents the extension of tax cuts and increased government spending, particularly in the military.”
The impact on bonds, cryptocurrencies and gold
As far as the bondsHolland explained that while “there’s not a lot to recover,” yields rose after what was the presidential debate and prices fell as Wall Street weighed a potential Republican landslide on Election Day and the likely extension of Trump’s tax cuts and increased government spending.
The fact that Trump is still perceived as a stronger candidate in the face of an almost certain replacement of Biden by Harris could mean a similar movement in bond yields and prices should she be nominated by the Democratic Party.
American Institute for Economic Research senior economist Peter Earle said that the greater the uncertainty about who the Democratic Party’s nominee will be, the more beneficial it will be for the gold and precious metals such as silver. “Investors will be looking for a safe haven until they can assess whether Biden’s replacement will continue or break with the policies of high taxes, more regulation and more government intervention,” he said.
On the other hand, Stephanie Vaughan, co-founder of Veda, believes that there could be an upturn in the crypto market following Biden’s withdrawal, as “a Trump presidency would be much more productive for the crypto ecosystem as a whole.” In the coming days, Trump will speak at Bitcoin 2024, the world’s largest Bitcoin conference, which will take place in the United States between July 25 and 27.
In other news, two memecoins linked to Biden plummeted by more than 50% moments after the announcement, while others rose by 18%. While these assets are purely speculative, they serve as a guide to voter sentiment.
Source: Ambito
