Biden's withdrawal shakes markets, Trump Media takes a hit

After President Joe Biden announced his decision to withdraw from the re-election race, Trump Media shares fell by over 3.6% on Monday. The American stock exchange is experiencing significant movement as investors face an influx of data from key companies starting to publish their reports.

According to Barron's, the stock price of the parent company of the Truth Social platform, whose majority shareholder is Republican presidential candidate Donald Trump, declined following the news of Biden's withdrawal. Initially, the loss reached 3.6%, but the company started to recover later in the day.

Stock indices in the U.S. behaved differently; on Monday, they rose in the morning. This is significant because last week, the S&P 500 lost 2%, recording its worst week since April due to a sell-off in technology stocks.

This week, investors are focusing less on the political game and more on company financial reports. Many firms in the technology sector and other industries will present their quarterly results in the coming days, and investors are already clearly reacting to this.

Barron's emphasizes that the echoes of Friday's failure have not yet subsided. CrowdStrike shares, the company largely responsible for it, fell by 9.7%, continuing the losses after Friday's collapse, which reached 11%. Microsoft, whose solutions were hit the hardest, reported that approximately 8.5 million computers worldwide were disabled due to the failure.

One of the stars on the floor was Nvidia. It recorded a 3.4% increase in shares. The reason could be information from Reuters, which reports that "the chip manufacturer plans to introduce a new artificial intelligence chip to the Chinese market." This is significant because the chip is supposed to meet the restrictions imposed by the American administration as part of the trade war.

On the other hand, Starbucks shares fell by 3.2%. On Friday, the stock rose by 6.9% in reaction to reports from "The Wall Street Journal."

Grzegorz Dróżdż, an analyst at Conotoxia Ltd. (Invest.Cinkciarz.pl), noted in his commentary that President Joe Biden's withdrawal from the fall elections did not produce a strong reaction in most financial markets. However, it may momentarily delay investors from making Donald Trump's return the main topic of summer trading. A noticeable movement occurred in the cryptocurrency market, where Trump seems to be more supportive than the current administration. The Bitcoin price first fell by 2.5% and then rose by 4%.

"In the coming days, investors may focus on American foreign policy, especially on Trump's protectionist practices. His recent statements about Taiwan, China, and Japan have impacted the market. As a result, the iShares Semiconductor ETF fell by 11.5% from its peaks, as Taiwan has a significant share in global semiconductor production. A similar reaction occurred on Japan's Nikkei 225, which fell by 7%. However, the negative trend may end as much of the bad news has already been priced into assets," wrote the expert.

According to the analyst, Biden's decision is beneficial for emerging markets. Still, the lack of a strong reaction stems from earlier speculations and the wait for the official nomination of Kamala Harris. "After Biden's disastrous debate performance and the attack on the Republican candidate, the estimation of Trump's chances of returning increased from 52% to 69%. Biden's withdrawal and support for Harris reduced those chances to 60%, the level before the attack," summarized the expert.