How are the Financial Markets Reacting After the Assassination Attempt on Donald Trump? An Overview.
The weekend attack is likely to benefit presidential candidate Donald Trump. Consequently, financial markets are reacting in favor of a "Trump trade," with market movements based on the expectation that Trump’s return to the White House would bring tax cuts, higher tariffs, and looser regulations.
One of the current winners on the markets is the cryptocurrency Bitcoin. Before Trump was shot, one Bitcoin cost significantly less than $60,000. On the Monday following the attack, the price of the digital currency rose considerably. Experts attribute the price increase to the ex-president’s positive stance on digital currencies. Other cryptocurrencies, such as Ethereum and Ripple, also rose by double digits on Monday. Increased political uncertainty is likely to increase demand for safe investments like gold.
The Dow Jones index rose by almost half a percent in the first hour of trading. The broad-based S&P 500 continued its recent gains with an increase of 0.37 percent. The technology exchange Nasdaq also saw slight gains. The focus of individual stocks primarily centered on companies associated with Trump. Shares of his media company, TMTG, which includes the platform Truth Social, rose by more than 40 percent in pre-market trading. Shares of the software developer Phunware, commissioned by Trump’s 2020 election campaign to develop a mobile phone app, shot up by around 30 percent.
Given Trump’s increased election chances, investors are concerned regarding the potential impact on future US economic policy. The US election campaign is likely to cause volatile markets in the coming weeks, traders say. On the bond markets, yields on government bonds rose, which experts explain with the expectation of potentially inflationary and debt-intensive economic policies under a Trump presidency.
If Trump returns to the White House, it might lead to higher tariffs and thus strengthen the dollar. On the Monday following the assassination, investors on the foreign exchange market initially seemed uncertain. The dollar index fell slightly once more following initial gains.
The events of the weekend did not cause any major waves on the Swiss market. The SMI started the new week slightly in the red. Generally, a transition from a Democratic to a Republican president is seen as more positive for stocks than a second term for a Democrat. If Trump wins, the current stock rally would gain even more momentum. However, the Swiss market is currently geared toward the current reporting season.
Financial Markets React to Trump Assassination Attempt: “Trump Trade” Emerges
The assassination attempt on former President Donald Trump over the weekend has sent shockwaves through the financial markets, with investors grappling with the potential implications of his possible return to the White House. The markets are reacting in line with what is being dubbed the “Trump trade,” a scenario where market movements are driven by the expectation that Trump’s presidency will bring regarding specific economic policies, including tax cuts, higher tariffs, and looser regulations.
Cryptocurrency Market Buoyed by Trump’s Pro-Crypto Stance
One of the initial beneficiaries of the “Trump trade” has been the cryptocurrency market. Bitcoin, in particular, surged in value following the attack, with its price rising significantly following hitting a value of less than $60,000 USD just before the incident. Experts attribute this increase to Trump’s known positive stance on digital currencies, which has generated optimism among crypto investors regarding his potential impact on the industry.
Other cryptocurrencies, such as Ethereum and Ripple, also witnessed double-digit gains on the Monday following the attack. The heightened political uncertainty and potential for economic shifts under a Trump presidency have fueled investor interest in digital assets, considered by many to be a safe haven during times of uncertainty.
Safe Haven Assets See Increased Demand
Alongside cryptocurrencies, traditional safe haven assets like gold are also seeing increased demand. The heightened risk associated with a potential Trump presidency, particularly in terms of possible inflation and economic instability, is driving investors to seek out safe, non-volatile assets like gold, further contributing to its price rise.
U.S. Stock Market Shows Positive Signs
The U.S. stock markets have generally responded positively to the possibility of a Trump return. The Dow Jones Industrial Average rose by almost half a percent in its first hour of trading on the Monday following the attack, signaling a bullish sentiment among investors. The broad-based S&P 500 also continued its recent upward trend, registering a 0.37 percent increase, while the tech-heavy Nasdaq stock market saw modest gains.
The focus within the stock market has been primarily on companies associated with Trump. Shares of his media company, TMTG, which includes the social media platform Truth Social, surged by more than 40 percent in pre-market trading. Additionally, Phunware, the software developer contracted by Trump’s 2020 election campaign to develop a mobile phone app, saw its stock price jump by approximately 30 percent.
International Markets Respond with Caution
International markets are responding with a mix of caution and optimism. The potential return of Trump and his associated economic policies are being closely watched by investors worldwide. The U.S. election campaign in general is expected to cause market volatility in the coming weeks, prompting investors to adopt a wait-and-see approach.
On the bond markets, yields on government bonds have risen. This is attributed to the anticipation of expansive fiscal policies under a Trump presidency, potentially leading to increased government spending and inflation. The rise in bond yields signals a potential decline in bond prices, which is generally considered to be a negative development for bond investors.
Foreign Exchange Market Displays Uncertainty
The foreign exchange market is also exhibiting uncertainty following the assassination attempt. The potential return of Trump, and his policies promoting increased trade protectionism and higher tariffs, has the potential to strengthen the U.S. dollar.
In the immediate followingmath of the incident, the dollar index registered some initial gains, suggesting a short-term flight to safety. However, the index subsequently fell slightly, indicating that investors are still attempting to gauge the long-term impact of a potential Trump presidency.
Swiss Stock Market Remains Relatively Unmoved
The Swiss stock market has displayed a relatively muted response to the weekend’s events. The SMI, the benchmark index for the Swiss stock exchange, started the new week slightly in the red. While a shift from a Democratic to a Republican president is generally seen as more positive for stocks, the focus on the Swiss market remains on the current earnings season, suggesting that investors are more focused on the immediate outlook for Swiss companies than the broader political landscape.
Key Takeaways:
- The financial markets are reacting to the potential return of Donald Trump with a “Trump trade,” defined by anticipated policies like tax cuts, tariffs, and deregulation.
- Cryptocurrencies, particularly Bitcoin, have surged in value in anticipation of Trump’s pro-crypto stance.
- Safe haven assets like gold are also witnessing increased demand due to the perceived risks associated with a Trump presidency.
- The U.S. stock market has generally responded positively, with shares associated with Trump showing significant gains.
- International markets are reacting with caution, awaiting further developments and assessing the potential impact of a Trump presidency on their economies.
- The foreign exchange market is volatile, with the U.S. dollar initially gaining but subsequently losing ground as investors grapple with the uncertain implications of a Trump return.
- The Swiss stock market remains relatively unaffected, with investors primarily focused on the current earnings reporting season.
