Global investors began pricing in the chances of a second term for former President Donald Trump Monday, following the first assassination attempt on a presidential challenger in more than five decades.
Trump, who was shot just after 6 pm Eastern Time during a campaign rally in Butler, Pa., suffered damage to his right ear before falling to the ground under the protection of Secret Service personnel. He was then immediately taken to a local hospital for examination and treatment.
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“I knew immediately that something was wrong in that I heard a whizzing sound, shots, and immediately felt the bullet ripping through the skin," Trump wrote on his Truth Social website. "Much bleeding took place."
Officials have said the gunman who attempted to kill the former president likely acted alone. Still, they have yet to establish a motive for the shooting, the first assassination attempt on a presidential candidate since Bobby Kennedy in 1968.
Trump is scheduled to attend the Republican National Convention this week in Milwaukee. Following the weekend events and the ongoing questions about President Joe Biden's health and mental fitness, polls and betting markets show a commanding lead for Trump.
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"With the next major inflation report a couple of weeks away, traders will be focusing on earnings and the Republication National Convention," said Chris Larkin, managing director for trading and investing at E-Trade From Morgan Stanley.
Trump's tariff proposals are in focus
Global financial markets are also adjusting to the likelihood of a second term for the former president, who has a record of loose regulations, lower corporate taxes, and 'America First' trade policies.
One of Trump's recent pledges, in fact, has included a promise to replace some levels of income tax with tariffs on all imports, including a 60% level on China-made goods. Economists have said this move could prompt inflation to resurge.
"While this weekend's heinous acts do not fundamentally change the earnings of companies we own, it can undoubtedly raise the overall risk of the stock market and reduce liquidity," said Michael Landsberg, chief investment officer at Landsberg Bennett Private Wealth Management in Punta Gorda, Florida.
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"In fixed-income markets, we could see rates rise in the short term due to what many market participants around the world view as instability and uncertainty in our government," he added. "Having a little extra cash and getting paid roughly 5% on it is not a bad strategy until some of this dust settles."
Benchmark 10-year Treasury note yields were last marked at 4.227%, 5 basis points higher from Friday's closing levels, in reaction to the weekend events and the political betting that followed. Meanwhile, 30-year bond yields were rising above 2-year notes for the first time since January.
Treasury yields leap after Trump shot
"It's not surprising to me that yields are up a bit because if you think there will be a Republican sweep, then you don't think there will be a check on fiscal policy, which already is on a poor trajectory," Roger Altman, founder and senior chairman at the investment-banking-advisory firm Evercore, told CNBC Monday. "And so you would, on that, be a seller of bonds."
Healthcare and health insurance stocks were also on the rise, with UnitedHealth Group (UNH) leading gainers with a 1% advance. Investors speculated that a Trump administration would revisit a Biden policy that would lower Medicare reimbursements.
Meanwhile, Trump Media & Technology (DJT) shares soared more than 27% in early trading and now carry a market value of around $7.5 billion as investors bet that Trump's Truth Social website could benefit from his presidency.
Tesla (TSLA) shares, meanwhile, were last marked 5.1% higher at $260.98, extending their one-month gain to around 40%. Investors see Trump White House and tariff protections as likely to support sales for the Austin electric vehicle producer.
Tesla CEO Elon Musk, in fact, formally endorsed Trump's candidacy on Saturday shortly after the violent events in Pennsylvania.
I fully endorse President Trump and hope for his rapid recovery pic.twitter.com/ZdxkF63EqF
— Elon Musk (@elonmusk) July 13, 2024
Wedbush analyst Dan Ives argues that a second Trump administration would likely be a net negative for the U.S. EV industry, given his dislike for taxpayer-funded rebates. But he says Tesla could nonetheless benefit.
"Tesla has the scale and scope that is unmatched in the EV industry, and this dynamic could give Musk and Tesla a clear competitive advantage in a non-EV-subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players," he said in a recent client note.
Would Trump be the 'bitcoin president'?
Bitcoin prices were another early beneficiary of the new presidential election outlook. The world's biggest cryptocurrency rose 3.8% to $63,137.30 in early Monday trading, extending its gain from Saturday lows by around $7,000.
Investors see Trump, who once claimed bitcoin's value was based "out of thin air," as a vocal advocate for the digital currency market. He reportedly told an event in San Francisco last month that he would be "the crypto president."
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Another component of an autumn election win for Trump would be the fate of current Federal Reserve Chairman Jerome Powell, a frequent target of criticism by the former president during his previous term in office.
Powell's second term as Fed chairman began in May 2022, leaving Trump with the option of attempting to remove him immediately — a move legal scholars have questioned — or waiting to appoint a predecessor when the term expires in 2026.
The Wall Street Journal has also reported that Trump's closest allies have been drafting proposals that could chip away at the Fed's political independence should he secure a second term.
When asked about this prospect during a central bank symposium in Portugal last month, Powell would say only that he was focused on "getting the job right" to reduce inflation and ensure maximum employment.
"I do think support for Fed independence is very high where it really matters on Capitol Hill, in both political parties," he added.
However, the more immediate market reaction is likely to focus on both Trump's recent polling surge and the impact his lead could have on stocks heading into the quieter weeks of late July and early August.
More Economic Analysis:
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- Biden debate flop boosts Trump, but economy may be tougher opponent
- First-half market gains come with a dash of investor unease
"We may get a little rally, a Trump bump if you will, on Monday’s open and could experience intraday volatility all week as political rhetoric will heat up into the Republican convention," said Jay Woods, chief global strategist at Freedom Capital Markets.
"Overall, the market will get back to focusing on earnings and Fed policy," he added. "We are heading into a seasonal time where the markets tend to underperform.
"Given the recent rally in the indices, a pullback would be normal. However, every market move will be scrutinized and highlighted with a political backdrop that has reached a boiling point."
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