Upon the recent assassination attempt on former US President Donald Trump, there has been a notable surge in demand for certain assets within the financial markets. Stock in Trump Media & Technology Group Corp (NASDAQ:DJT) experienced a significant increase, with shares in the parent company of Trump’s Truth Social media company soaring by 54% to $47.70. Similarly, the value of bitcoin has seen an upturn, with its value rising from the mid $57,000s on Friday to above $60,000 on Sunday, and further extending gains to above $63,200 this morning.
Initially, the shooting led to a moderate rise in the demand for safe-haven assets such as gold, but this trend was short-lived and did not persist into Monday. As mentioned by Kathleen Brooks, head of research at XTB, the event had a more substantial political impact than a financial one. While there was a mild rush to safe havens, the retreat of gold, US 10-year Treasury yields falling a mere 3 basis points, and the dollar giving back earlier gains as the European trading session begins, highlights the limited financial impact of the shooting.
Market analyst Neil Wilson at Finalto emphasized that Trump’s shooting not only had a “pro-crypto” effect, but also triggered a “fear trade”. There is genuine fear about the potential outcomes in America, and speculation about Trump becoming a potential saviour in the eyes of the public, particularly with his promise to give a “whole different speech” at this week’s Republican National Convention. Wilson also noted shifts in “the Trump 2.0 trade”, including rises in Treasury yields and the dollar, as well as falls in Asian stocks and Mexico’s peso. However, he indicated that the dollar has since decreased, and there are multiple factors in play. The attempted assassination seems to have bolstered Trump’s image as a fighter, increasing the likelihood of his victory in the November Presidential election.
According to Jane Foley, senior FX strategist at Rabobank, the financial markets have a lot to process. The response of market pricing simplifies the complexities of the US political backdrop to the assumption that the weekend events will amplify the likelihood of Trump winning the November Presidential election.
This assumption has also impacted the US dollar, which gained ground this morning. Foley suggested that the assumption was based on the belief that a looser US fiscal policy and greater tariffs under Trump would be inflationary and could limit the degree of Fed rate cuts this cycle. However, she also mentioned that market expectations of a September Fed rate cut have been growing, and an interview with Fed Chair Powell later today will ensure that the outlook for monetary policy pre-election remains a headline in the market.
In conclusion, the financial markets have displayed a distinct reaction to the recent events involving Donald Trump. Despite the initial surge in safe-haven demand following the shooting, the subsequent rise in Trump Media stock and bitcoin values reflects the uncertainty and potential impact of these events on the upcoming US Presidential election. As always, financial markets will continue to monitor and respond to unfolding political and economic developments closely.