Global markets remained steady on Monday following President Joe Biden’s announcement that he would not seek re-election, endorsing Vice President Kamala Harris for the Democratic ticket. The unexpected news brought a sense of optimism to investors, while a surprise rate cut by China’s central bank failed to invigorate Asian markets.
The announcement was made on Sunday, and it quickly impacted online betting markets. Predictit showed a slight decline in pricing for a victory by Donald Trump, dropping 4 cents to 60 cents, while Kamala Harris saw an increase of 12 cents to 39 cents.
In response to the news, U.S. stock futures showed positive movement. The S&P 500 futures rose by 0.5%, and the Nasdaq futures increased by 0.8%. The MSCI All-World Index, which had suffered a 2.1% decline last week in its worst performance since April, managed to edge into positive territory, up by 0.04%.
The dollar remained steady against a basket of currencies, and the cryptocurrency market, which had reacted to the possibility of Trump returning to the White House, steadied after initially falling on Sunday following Biden’s announcement.
“There’s been a bit of an unwinding of that ‘Trump trade’, those fears we saw last week that lifted the dollar and pressurised European stocks at least, and an overall, a bit of an upbeat mood on the news,” said Fiona Cincotta, senior market analyst at City Index. “What has been interesting has been crypto. It’s like the Trump barometer, and that is off slightly. So that does suggest that, potentially, there is a little bit more of a challenge presented from Kamala Harris.”
Bitcoin, which had hit six-week highs last week in its strongest weekly rally since February, traded on a more even keel on Monday, up 0.5% at $67,356.
US Treasuries also showed signs of strength. Yields on the benchmark 10-year note fell by 1.6 basis points to 4.221%. Last week, yields had risen as investors factored in the possibility of a Trump administration favoring significant increases in spending, potentially exacerbating the United States’ fiscal challenges.
Asian markets, however, did not share in the optimism seen in other regions. The surprise rate cut by China’s central bank failed to provide the anticipated boost. Investors in Asia remained cautious, reflecting broader concerns over economic growth and stability in the region.
Overall, the markets appear to be adjusting to the new political landscape in the United States, with a notable shift in investor sentiment following President Biden’s decision to step down from the election race. As the election race progresses, the market will likely continue to respond to developments, particularly those related to key candidates and their potential economic policies.
The coming weeks will be crucial for investors as they navigate the uncertainties of the U.S. political scene and its impact on global financial markets. With Vice President Kamala Harris now endorsed by President Biden, her policy positions and campaign developments will be closely watched, alongside the reactions from her political opponents.
