(Bloomberg) — Investors may initially favor traditional safe-haven assets and lean toward trades most linked to the chances of former President Donald Trump, who survived an assassination attempt, winning the White House, market participants said.
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“We’ll definitely see some protectionist and safe haven flows in the Asian markets early in the morning,” said Nick Twidale, chief market analyst at ATFX Global Markets. “I think gold could test its all-time highs. We’ll see buying of the yen and dollar and some inflows into government bonds.”
Early market comments suggested that Trump’s shooting at a rally in Pennsylvania on Saturday could also lead traders to boost his chances of winning the November election. His support for fiscal easing and higher tariffs is generally seen as likely to favor the dollar and weaken Treasuries.
One indicator of market sentiment early in the weekend was Bitcoin’s rise above $60,000, which may reflect President Trump’s pro-crypto stance.
Other assets that could benefit from the so-called Trump trade include shares of energy companies, private prisons, credit card companies and health insurers.Traders will also be keeping a close eye on market anticipation volatility gauges on Monday, including the tariff-sensitive Chinese yuan and Mexican peso, which have begun to price in the U.S. vote.
Trump said he was shot in the right ear during a shootout at the rally. His campaign said in a statement that he was hurried off the stage after the incident but that he was “OK.”
Bloomberg strategists say…
“In Asia, currencies will be the first major markets to react to the weekend shootings on Monday. Further volatility is likely and clarity may be particularly difficult to come by as a public holiday in Japan will hamper liquidity.”
— Garfield Reynolds, Asia Team Leader, MarketLive
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Strategists were already expecting a volatile race, with President Joe Biden’s lackluster performance in last month’s debate raising questions about his age and Democrats still struggling with his candidacy. Investors were also fretting about the possibility of the race ending in drawn-out disputes and political insurrection.
But events like Pennsylvania’s are almost unprecedented. When President Ronald Reagan was shot 40 years ago, the stock market fell and closed early. The next day, March 31, 1981, the S&P 500 rose more than 1%, while the yield on the benchmark 10-year Treasury note fell 9 basis points to 13.13%, according to data compiled by Bloomberg.
Marko Papic, chief strategist at California-based BCA Research, said bond investors should pay particular attention because the attacks are likely to increase the chances of President Trump’s election and ultimately lead to concerns about the fiscal outlook.
“The bond market will eventually realize that President Trump has a better chance of winning the White House than any of his rivals,” Papich wrote, “and I continue to believe that as his odds rise, so too should the likelihood of a bond market rally.”
Kyle Rodda, senior financial markets analyst at Capital.com, said he has seen an influx of customers into bitcoin and gold following the shooting.
“This news marks a turning point in U.S. political norms,” he said. “For markets, it means a safe-haven trade, but one biased towards non-traditional safe-haven assets.”
(Adds Bitcoin reaction and MLIV commentary)
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