Key points:

  • On Saturday, Donald Trump was shot in the ear at a campaign rally in Pennsylvania in what the FBI considered an assassination attempt.
  • Geopolitical events causing fear in the market may increase the price of gold, dollar and bitcoin.
  • Analysts believe Trump’s chance of victory has not increased to 70% since the assassination attempt.

On Saturday, during a campaign rally in Pennsylvania, Donald Trump was shot in the ear in what the FBI said was considered an assassination attempt. The Trump campaign subsequently said the former president was “doing well” and didn’t appear to have suffered serious injuries other than a gash to his upper right ear.

However, the market couldn’t help but react to this event.

The dollar may strengthen, Bitcoin is growing on the news

Quincy Crosby, chief global strategist at Charlotte, N.C.-based LPL Financial, said any geopolitical event that causes growing concern or outright fear, especially as the Republican National Convention opens, will push up the price of gold and increase demand for Treasuries.

She also noted that the dollar, which has weakened due to market expectations about a possible Fed rate cut in September, could strengthen with increased demand for safe assets. However, if there is a more serious threat to US officials, the stock market could decline significantly, requiring the Fed to provide additional liquidity. At the moment, such a scenario seems extremely unlikely.

Hong Guo, head of Asian research at ANZ in Singapore, said the likelihood of a Trump victory in betting markets had risen to 70% since the assassination attempt. He expressed uncertainty about exactly how markets would react, suggesting that Bitcoin’s rally could be linked to concerns about more civil unrest. Guo also noted that there will likely be some risk associated with open market movements, but this effect should fade quickly.

The impact of the attack on the stock market is considered unlikely

Steve Sosnick, chief strategist at Interactive Brokers in Greenwich, said he’ll be watching closely for an extension of the October-December surge in VIX futures or a rise in the Treasury yield curve. The former signals concerns about pre- and post-election volatility, while the latter points to bond market concerns about the likely displacement of income taxes by tariffs under Trump.

Sosnik expressed doubt that these factors will significantly affect stock markets, noting that stock traders are not particularly adept at assessing events with an uncertain impact on earnings, cash flows and other indicators, which include this weekend’s events.

Tina Fordham, a London-based geopolitical strategist and founder of Fordham Global Foresight, said the shooting complicates the electoral prospects of Democrats, who are already divided over Biden’s future as a candidate. According to her, political violence in the United States, unfortunately, is a systemic feature. She also stressed that she does not expect a significant initial reaction in financial markets, although the immediate effect could be an acceleration of market consensus on a Trump victory.

Nick Ferres, chief investment officer at Vantage Point Asset Management in Singapore, said the election was likely to give Trump a landslide victory, which could reduce uncertainty. In his opinion, Trump has always been more “pro-market.” The key question going forward is whether fiscal policy will remain as loose and what implications this may have for inflation and the future path of interest rates. Ferres also cited polling results that showed a surge in support for Ronald Reagan after his assassination attempt in 1981. According to the American Presidency Project at the University of California, Santa Barbara, Reagan’s approval rating, which had already risen significantly in the first months of his presidency, increased another 7 percentage points in the first poll taken after the assassination. However, this increase was temporary and died down over the next three months.