Biden Quits US Presidential Race, Harris Steps Up: What Next for US Politics and the Global Markets?

Biden Quits US Presidential Race, Harris Steps Up: What Next for US Politics and the Global Markets? 

US President Joe Biden has formally withdrawn from the US presidential election race, and endorsed Vice President Kamala Harris as the Democratic Party’s nominee for the upcoming presidential election.

Biden Out; Harris In

Pressures from within the Democratic Party for Biden to step down increased following his disastrous debate performance last month and concerns regarding his mental acuity – in addition to the assassination attempt on Donald Trump, which seems to have given the Republican nominee new momentum. 

Following the news of Biden’s decision to leave the election race, there was an outpour of public support for Harris by key Democratic Party figures, including the Clintons. However, the Obamas’ failure to mention Harris in their statement has caught the eye of many.

Although Harris raised more than US$46.7 million in the seven hours after her campaign launch on Sunday – more than the 2024 Biden-Harris campaign ever raised in one day – according to fundraising platform ActBlue, her nomination is far from secure. All eyes now turn to the Democratic National Convention next month in Chicago, where the decision on whether Harris will be selected as nominee will be made official. 

Republican Party nominee Donald Trump took to social media moments following Sunday’s news, claiming the President was ‘not fit to run for president’ and ‘not fit to serve’. In a phone call with CNN, he also suggested Harris would not pose a bigger problem for him than Biden. Current polls seem to be in agreement with ex-President Trump as Harris is more-or-less on the same numbers as Biden but it is too soon for any conclusions to be drawn. 

Market Implications

So far, the market reaction has been rather muted. Still, most analysts argue the potential market impact of the US election is unpredictable and will depend on how the campaigns and polling results unfold in the coming months. 

The election uncertainty and investors expecting the US Federal Reserve to reduce its target on the Fed funds rate in September and potentially again at either November or December’s meeting will likely make for a volatile market in the months ahead.

Major US equity index futures observed a modest bid in early trading; the S&P 500 and Nasdaq futures rallied approximately +0.1%. US Treasuries also witnessed a moderate upward move, sending yields and the US dollar (USD) lower. According to the US Dollar Index, the USD gapped south and clocked a low of 103.65 before recouping the majority of earlier losses. However, aided by price rejecting the underside of the 200-day simple moving average, heading into the European cash open, the Index, once again, ventured lower and is now within striking distance of challenging earlier lows at the time of writing.

Spot gold (XAU/USD) rallied at the open, reaching a high of $2,412 before grinding lower towards $2,400 at the European cash open. In the Crypto space, Bitcoin rallied to a high of $69,495 versus the US dollar (BTC/USD), reaching its highest level since early June before dropping lower and retesting pre-opening levels.