Traders are working hard to cope with the uncertainty of the Federal Reserve's interest rates and the upcoming performance of technology giants, and now they must further weigh how Harris or other candidates will counter Trump. With only four months left until the election, there are too many unknowns, and the US stock market may face a "turbulent summer".
As the US earnings season opens, Biden abruptly announces he is not seeking re-election, causing a sudden change in the US presidential race and adding further uncertainty to the financial markets. In terms of product structure, product revenues in the 10-30 billion yuan range were 401/1288/60 million yuan, respectively, with overall sales volumes reaching 18,000 kiloliters in 2023, a YoY increase of 28.10%.
According to CCTV news on Monday, current US President Biden announced his withdrawal from the 2024 presidential election and recommended Vice President Harris as the Democratic candidate to compete against Trump.
Traders are currently struggling with uncertainties surrounding Fed interest rates and upcoming performance reports from tech giants. Now they must further weigh how Harris or other candidates will compete with Trump. With four months to go until the election, too many variables are unknown, and traders are preparing for a "turbulent summer."
This decision has completely upset the original expectations of the election, with investors weighing the potential impact of this change on the market. Some analysts believe that the 'Trump trade' will start to unwind, and they are bullish on the performance of emerging market assets.
The market is currently reacting calmly.
The Asian market was "calm" this morning, with S&P 500 futures up nearly 0.4%, "key political indicator" Bitcoin down slightly, and the US dollar exchange rate remaining relatively stable.
Overall, the market's immediate reaction to this political upheaval has been relatively calm. Previously, after a poor performance in the first televised debate, the market had expected Biden to drop out, and then Biden contracted COVID-19 and was repeatedly discouraged by party bigwigs and donors, prompting further expectations of his withdrawal.
This political turmoil comes on the eve of earnings releases this week from tech giants such as Alphabet and Tesla.
Last week, the S&P 500 index fell 2%, as investors increased their bets that tech stocks would lose their dominant position, and smaller companies benefited, with the Russell 2000 index up for the second consecutive week. The rotation of tech stocks and small-cap stocks is continuing.
However, some industries are often more sensitive to political change. When trading resumes on Monday, investors concerned about political influence may focus on cryptocurrencies, private prison operators, and fossil fuel-related companies, as well as heavily regulated industries such as finance and healthcare, and gun manufacturers.
US stocks are heading for a "turbulent summer."
Biden's withdrawal from the race has brought huge changes to US politics, adding new uncertainties to the financial markets. Investors are closely watching the development of the political situation to evaluate the potential impact of different candidates' policy stances on the market. Over the next few months, the market may experience significant volatility due to political factors.
Deepwater Asset Management co-founder Gene Munster said:
"This means more short-term uncertainty, and the market had previously been confident that Trump would win. Now it faces new unknowns, and the market doesn't like this uncertainty or the news about who wins or loses or all these unknowns."
Richard Bernstein's deputy chief investment officer Dan Suzuki said:
"The direct impact is to add uncertainty to the argument that Republicans will sweep the market. Apart from that, everything is still unknown until the Democratic candidate becomes clearer."
Miller strategist Matt Maley believes that the 'Trump trade' in Bitcoin and energy will start to unwind, and some trades that have been impacted, such as solar energy stocks or electric cars, may rebound. But there is still a lot of uncertainty, and the market doesn't like that. From now until September, we will see a significant increase in volatility.
For risk assets, including emerging markets, the initial reaction is likely to be positive. If everything goes well, the Democrats can now take the House, and the market generally wants to see more results like this, rather than a Republican sweep.
Brandywine Global Investment Management portfolio manager Jack McIntyre said:
"For risk assets, including emerging markets, the initial reaction is likely to be positive. If everything goes well, the Democrats can now take the House, and the market generally wants to see more results like this, rather than a Republican sweep."
Jennifer Gorgoll, investment manager at Neuberger Berman LLC, believes that:
In the short term, the expected interest rate cut by the Federal Reserve will dominate the market, may weakened the US dollar, leading to the strength of CSI commodity equity index and emerging markets MMF.
Combined with broader risk appetite associated with the 'Trump trade', market could see stunning growth in 2025, we believe that emerging markets could be among the primary beneficiaries.