- Global stock markets remained stable on Monday following President Joe Biden’s announcement that he will withdraw from the 2024 presidential race.
- Biden’s decision to exit the race had been anticipated by the market, which minimised its impact.
OUR TAKE
Biden’s announcement that he’s stepping down barely moved the markets—they’re as steady as ever. The MSCI index even rose, bouncing back from last week’s sharp drop. On Wall Street, tech and communication stocks led the charge, with Nvidia’s new AI chip sending its stock price soaring. However, despite China’s rate cut, Asian markets didn’t respond positively, and the MSCI Asia-Pacific index fell. Oil and gold prices also continued to slide, showing that the market’s mood is as unpredictable as the weather.
–Miurio huang, BTW reporter
What happened
Global stock markets remained stable on Monday following President Joe Biden’s announcement that he will withdraw from the 2024 presidential race. Biden’s exit came with an endorsement of Vice President Kamala Harris as the Democratic nominee. This news did not significantly impact market behavior; MSCI’s global stock index rose by 0.75% to 816.92. Last week, the index had experienced a decline of 2.1%, its worst performance since April.
On Wall Street, all major indexes closed higher, driven by gains in technology and communication services sectors. Nvidia saw a notable increase of nearly 5% after announcing the development of a new AI chip for the Chinese market. The Dow Jones Industrial Average rose by 0.32%, the S&P 500 gained 1.08%, and the Nasdaq Composite climbed 1.58%.
The People’s Bank of China’s unexpected rate cut failed to boost Asian markets, with MSCI’s Asia-Pacific index outside Japan falling by 0.61%. Oil prices fell for the second consecutive session, with Brent crude and U.S. West Texas Intermediate reaching one-month lows. Gold prices also dropped to a more than one-week low.
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Why it’s important
Biden’s decision to exit the race had been anticipated by the market, which minimised its impact. Lou Basenese of MDB Capital noted that the market had already priced in Biden’s withdrawal, leading to a rebound in riskier assets such as small caps and Bitcoin. This shift suggests that investors were more focused on the implications of the political landscape rather than the immediate impact of Biden’s exit.
The rise in major U.S. indexes reflects renewed investor confidence in technology and communication sectors, which are seen as key drivers of market performance. The anticipated Federal Reserve rate cut, which is expected to be priced in by September, is also supporting market stability.
In Europe, the STOXX 600’s gain indicates positive sentiment despite broader market challenges. In Asia, the lack of a significant boost from the rate cut highlights ongoing concerns about economic growth and market sentiment. The decline in oil and gold prices further underscores the market’s current state of flux, driven by supply and demand dynamics.
