The Trump trade is in full swing as markets react to the attempted assassination of the former president
Markets adjusted their outlook for a second Trump term as betting odds rise in favor of the former president after the weekend's assassination attempt.
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- The Trump trade was in full swing following the attempted assassination of the former president over the weekend.
- Bitcoin surged following the event, while the dollar also gained.
- Shares of Tesla, private prison firm GEO Group, and Trump's own media company all spiked.
The attempted assassination of former President Donald Trump is already impacting markets as investors place bets on trades set to benefit from a second Trump term.
In the immediate aftermath of the attempted assassination at Trump's rally in Butler, Pennsylvania, the price of bitcoin increased by 2%. Those gains extended to 4% on Monday morning.
Trump has come out strongly in favor of bitcoin this year and is set to headline the Bitcoin Conference in Nashville, Tennessee later this month, where he'll deliver an address to attendees.
Shares of Trump Media and Technology Group soared 48% on a massive trading volume of 13 million shares in Monday's pre-market trading session. Shortly after the opening bell, the stock pared that gain to about 28% to trade at $40 a share.
Tesla stock was also higher on Monday by about 4%.
While Trump's potential reelection in November could have mixed results for the electric vehicle industry, analysts have described the company as a Trump trade, and the EV maker was largely higher as its CEO, Elon Musk, endorsed Trump over the weekend.
"I fully endorse President Trump and hope for his rapid recovery," Musk said via Twitter on Saturday.
Shares of GEO Group, a company that operates private prisons and correctional facilities, jumped about 7% on Monday.
The company is seen as benefiting from a second Trump presidency, especially if Trump follows through on his proposed plan to detain and deport millions of immigrants.
Markets see higher inflation, higher rates
Even before the events of the weekend, economists and analysts were debating what a Trump presidency would mean for markets.
A Trump agenda would spur "higher inflation expectations, higher breakeven rates, higher yields and steeper yield curve because of expectations of greater deficit spending in the United States," Kyle Rodda, a senior market analyst at Capital.com, an online trading platform, wrote in a client note
Rodda wrote that in the short term, investors will look to bitcoin and gold as havens to hedge against political instability in the US.
Long-term bond yields rose Monday on the prospects of higher inflation and expanding fiscal policy under a potential second Trump Presidency, with the 30-year US Treasury yield rising above the 2-year US Treasury yield for the first time since January.
"UST yields are rising as the prospect of Trump regaining the presidency also rises. Higher tariffs, restricted immigration, and the extension of the Tax Cut and Jobs Act are the three key aspects of Trump's policy agenda that traders associate with higher inflation and higher interest rates," wrote Macquarie strategist Thierry Wizman in a note on Monday, adding that European defense stocks were also rallying on the premise that Trump will force Europe's governments to spend more on defense.
"Judging by historical parallels, this event will galvanize the Trump vote, meaning the markets will gradually price in the so-called 'Trump trade,'" wrote Rodda.
"The direct impact could be a firmer US dollar, as higher odds of a Trump's presidency suggest that his inflationary policies in terms of stricter immigration, tougher trade ties, and increased spending could potentially be set to pass," Yeap Rong Jun, a markets analyst at trading platform IG, wrote on Monday.
Finally, an odd beneficiary of the failed attempt on Trump's life appeared to be the stock of a Chinese company whose name sounds like "Trump Wins Big" when pronounced in its local language.
The stock saw its price rise by the maximum daily limit of 10% in Shenzhen. Wisesoft also saw its stock price rise in late June following President Joe Biden's poor debate performance against Trump.