President Joe Biden’s decision to withdraw from the US election race has sparked some optimism among investors. The announcement, made on Sunday, was met with surprise as Democrat opposition to incumbent Donald Trump’s bid for a second term continues to grow.
Financial market experts had previously predicted a Trump victory in November’s election, with the failed assassination attempt on the former president further solidifying this belief. However, the assumption of a sympathy vote for Trump may have been premature.
The struggles of Biden, who faced a decline in polling even before the shooting, were compounded by his performance in the recent TV debate with Trump. The Democrat’s frequent lapses in thought raised concerns among voters about the 81-year-old’s ability to serve another term.
In response to Biden’s withdrawal, S&P 500 stock futures saw a slight increase of 0.1%, while those for the tech-focused Nasdaq rose by 0.2% ahead of the US market opening on Monday. US Treasuries and the dollar remained stable, while cryptocurrency values, which have been boosted by the prospect of a Trump return to the White House, saw no significant changes. However, some cryptocurrencies did experience a slight drop following Biden’s announcement.
Investment analyst Dan Coatsworth from AJ Bell commented on the investor reaction, stating: “The market appears to have welcomed Joe Biden’s withdrawal from the presidential race, given how futures prices imply a decent opening for Wall Street. However, there is still a lot of uncertainty until the new Democratic candidate is confirmed.”
Coatsworth also noted that the endorsement of Vice President Kamala Harris by Biden helps to avoid any panic on the markets, as she brings continuity and experience to support the current president. He predicts that the focus for markets in the coming weeks will be on reassessing previous trades made in anticipation of a Trump victory. With the potential for heightened volatility, investors will closely follow any developments from Washington.
