Biden withdrawal from Trump fight gets cautious welcome from investors
The prospect of a continuity candidate replacing Joe Biden in the race for the White House has kept markets settled, according to one market expert who thinks there is still the prospect of volatility ahead.
President Joe Biden’s decision to bow out of the US election race has been greeted with some optimism by investors.
US stock market futures showed an uptick in the wake of Sunday’s announcement – greeted with some surprise despite growing Democrat opposition to the incumbent’s bid for a second term.
Financial market commentators said last week that a win for Donald Trump in November’s contest was essentially priced-in after the failed assassination attempt.
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That was mostly built on the assumption of a huge sympathy vote for the former president.
Mr Biden‘s struggles in polling were already evident before the shooting.
His fortunes went into sharp decline after the TV debate between the pair in which the Democrat lost his train of thought several times, bolstering existing concerns among the electorate on whether the 81-year old was fit to seek a second term.
S&P 500 stock futures nudged up 0.1% while those for the tech-focused Nasdaq were 0.2% higher ahead of the US market open on Monday.
US Treasuries and the dollar were steady.
Cryptocurrency values – which have tended to benefit from growing chances of a return of Trump to the White House – were also flat.
The likes of Bitcoin did take a small drop on Sunday following the Biden campaign’s announcement.
Dan Coatsworth, investment analyst at AJ Bell, said of the investor backdrop: “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.
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“That means we could see heightened volatility over the next few weeks, with assets quickly changing direction depending on the latest comments from Washington.
“Vice President Kamala Harris being endorsed by Biden helps to avoid any panic on markets for now, given she provides continuity and experience supporting the current president.
“That means the focus for markets in the near-term is likely to be investors reassessing any previous trades they made when it looked like Donald Trump would get back into power.”
