Monday witnessed a significant surge in global markets following President Joe Biden’s unexpected decision to step back from the 2024 presidential contest and throw his support behind Vice President Kamala Harris as the Democratic nominee.
The Dow Jones Industrial Average in the US climbed 128 points (0.3%), the S&P 500 surged 1.1%, and the Nasdaq rose by 1.6%. Across the pond, European markets enjoyed positive movements, while most Asian markets closed with a negative outlook. US Treasuries observed a modest uptick, resulting in lower yields and a depreciation of the dollar against major currencies.
Notable recoveries were noted in the tech sector, with Nvidia registering a 4.8% increase and Advanced Micro Devices at 2.8%. Conversely, CrowdStrike, still reeling from a recent global tech disruption episode, saw its shares plummet by 13.5%, shedding 27% of its value since last Thursday.
Prior to Biden’s surprising announcement, apprehensions surrounding his head-to-head competition with former President Donald Trump had caused stock investors to pivot towards assets likely to benefit from Trump’s policies, while swiftly divesting from green energy-related stocks, fueled by fears of a potential Trump resurgence. This led to a dip in US Treasury prices and an escalation in yields due to inflation anxieties.
By throwing his weight behind Harris, Biden succeeded in consolidating the Democratic party’s support around her, reducing uncertainties in the financial markets. CEO of Infrastructure Capital Advisors, Jay Hatfield, remarked, “The endorsement of Kamala Harris by Biden reduces uncertainty,” envisaging a more placid market environment.
The preceding week posed challenges for the markets, reflected in the S&P 500’s bleakest three-day performance in 2024, and Europe’s STOXX 600 enduring its most trying week since October. Analysts caution that market turbulences could linger as the election date nears.
Despite recent hurdles, the markets have exhibited tenacity. The S&P 500 has recorded gains in 28 of the past 38 weeks, a feat not observed since 1989.
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