The US markets could experience a decline in the early hours of trading on Monday. However, they are expected to rebound and reach new record highs once it is confirmed that former US President Donald Trump is in good health and remains a candidate for the presidency, an analyst has said.
Trump was shot through the ear at a rally in Pennsylvania on Saturday in an assassination attempt that sent shock waves through America.
“Nasdaq already broke 35 new records since the beginning of the year and S&P above 25 new record highs …. so I would not be surprised to see some sell off so people can book some profits initially taking advantage of this volatility," Amro Zakaria Abdu, a global financial markets strategist based in the UAE said.
“Eventually I think things will steady and if it becomes clear that Trump is okay and will continue to run and most likely will then we're going to see more record highs this year.”
Crypto
Bitcoin, the world's largest cryptocurrency, rose on Sunday following an assassination attempt. It was trading 3.84 per cent higher at $60,249.42 at 10.12am UAE time on Sunday, while Ethereum was up 2.09 per cent at $3,198.18 compared to the day before. Other cryptocurrencies including Dogecoin, Solana and Shiba Inu also gained after the incident.
Trump has positioned himself recently as the champion of cryptocurrencies and also indicated he would like to see more bitcoin mining by US firms.
“We want all the remaining Bitcoin to be MADE IN THE USA,” Reuters reported earlier this month citing Trump as saying on his Truth Social platform in June. He was also supposed to address a Bitcoin conference in the US later this month.
Bitcoin has risen because of Trump's support for cryptocurrencies, according to Vijay Valecha, chief investment officer of Dubai-based Century Financial.
“Donald Trump has made clear his support for Bitcoin mining and the self-custody of digital assets. He has indicated that if he were to be re-elected as president, his administration would refrain from using regulatory authority to crack down on the use of bitcoin and other cryptocurrencies,” Mr Valecha, said.
Gold
Gold as well as the US dollar and treasuries are also expected to benefit due to their safe haven status.
As markets reopen Monday, heightened volatility in currency markets are likely to take place in response, explained Mr Valecha.
“Increased uncertainty on the trade front is anticipated in the event of a Trump presidency due to his protectionist policies. This uncertainty could lead to investors seeking safe haven assets, with the US Dollar being a potential beneficiary.”
Gold was trading 2,411.43 per ounce when markets closed on Friday and the outlook is that it is expected to hit new highs later this year amid continued demand for the bullion.
Last month, Bank of America put out a note suggesting that gold could hit $3,000 an ounce over the next 12 to 18 months as demand continues to rise for the yellow metal.
Financial markets
Financial markets are also expected to be impacted, with the stock market forecast to experience “increased volatility in the short term as investors react to the news” of Trump's assassination attempt, Mr Valecha, said.
Among the beneficiaries could be especially those that benefit from Trump's policies including infrastructure and defence companies. Small-cap stocks, which have historically performed well under Republican administrations. are also expected to do well, he added.
Real estate stocks as well as energy stocks related to oil and gas are also expected to do well as Trump has been supportive of the growth of the sectors.
However, the clean energy sector could be impacted due to reduced investments as Trump has expressed intentions to roll back certain policies that have been favourable to green-energy and electric-vehicle companies, according to Mr Valecha.
A report by Wood Mackenzie in May said that Trump's victory in the November elections could threaten $1 trillion in energy investments and future support for low-carbon energy sources.
“While investments for technologies that support the energy transition and low carbon technology may decelerate, the opposite effect might take place for fossil fuels, which could see expanded investment and push out peak fossil fuel demand,” the report said.
Technology companies relying on global supply chains are also projected to feel the impact of Trump's trade policies and potential tariffs on foreign goods. Emerging markets that heavily depend on exports to the US could also be impacted, Mr Valecha added.
