Gold and yen surge as Trump shooting stokes market fears

Donald Trump was shot non-fatally during a campaign rally on Saturday in Butler, Pennsylvania, which immediately raised questions about possible market reactions. On Sunday, most transactions are suspended, but analysts predict an increase in interest in safe-haven assets.

Bloomberg notes that the incident could have far-reaching consequences for both the markets and the dynamics of the presidential campaign in the USA.

Financial experts expect a decisive reaction from investors, who may massively seek refuge in traditional safe havens in the face of growing political uncertainty. Nick Twidale, chief market analyst at ATFX Global Markets, predicts that gold may soon test its historical highs. Twidale also expects that the Japanese yen, traditionally considered a safe-haven currency in times of uncertainty, will appreciate.

Additionally, the analyst points to a likely increase in interest in the US dollar and US Treasury bonds, which often serve as safe havens for investors during global turmoil.

At the same time, initial market comments and analyses suggest that the incident could paradoxically increase Trump's chances of winning the upcoming presidential election. This assessment of the situation may direct investors' attention to assets most exposed to the economic policy proposed by the former president.

Among the so-called "Trump papers," analysts include a range of financial instruments and economic sectors. These include the US dollar, which may rise in anticipation of a more protectionist trade policy, and US Treasury bonds, whose yields may increase due to expectations of a widening budget deficit.

Experts also point to potential benefits for certain economic sectors in the event of Trump's re-election. Among the beneficiaries are private prison stocks, which could be linked to more restrictive immigration policies. Credit card companies might benefit from the potential easing of financial regulations, while health insurance companies could see gains tied to possible changes in the healthcare system proposed by Trump.

Marko Papic, chief strategist at BCA Research Inc., in his analysis, particularly draws attention to the bond market. Papic argues that the attack on Trump could significantly increase his chances of winning the presidential election.

Kyle Rodda, senior financial market analyst at Capital.com, has already observed an increased inflow of client funds into bitcoin and gold directly following the incident. The cryptocurrency recorded a noticeable increase after news of the shooting emerged, indicating a growing perception of bitcoin as an alternative safe-haven asset in times of political uncertainty.

It is worth citing the analysis published a few weeks ago by Peter Garnry, head of equity strategy at Saxo Bank, which indicates which specific industries may benefit depending on the outcome of the US presidential election. The author of the analysis emphasized that Trump "during his last presidency (2016-2020) focused on supply-side economics, reflected in drastic corporate tax rate cuts. His policies largely benefited corporations and the capital market, but not necessarily the average American."

The Saxo Bank expert, however, notes that "Trump no longer has the means to pursue similar policies, including tax cuts, because US public debt is growing faster than nominal GDP. Trump's 2016-2020 strategy cannot be continued without serious risk to confidence in the dollar and the long-term financial stability of the US economy."

Nonetheless, according to Garnry, there are certain stock market sectors that could positively respond to Trump's victory. These include the European defence sector, the US real estate market, and small-cap companies.

Trump has long criticized Europe's minimal involvement in NATO and has threatened to withdraw the US from the alliance or at least stop protecting countries that do not allocate at least 2% of GDP to defence. While it is unlikely that Trump would actually withdraw the US from NATO, his statements have alarmed European capitals, and many EU countries have decided to drastically increase their defence budgets, according to the Saxo Bank analyst.

Analysts predict that in the coming days and weeks, financial markets will be characterized by increased volatility. Investors will closely monitor not only Donald Trump's health but also any changes in election polls and general social sentiments. Particular attention is being paid to market measures of expected volatility, such as those related to the tariff-sensitive Chinese yuan, which had already begun to price in risks associated with the US elections.

In the context of the upcoming Republican convention in Milwaukee, scheduled for the upcoming week, questions are emerging about potential schedule changes and security measures.

Experts also emphasize that the incident could have a long-term impact on the election campaign and public debate in the USA. Images of Trump with a raised fist and a bloodied ear, surrounded by Secret Service agents, with the American flag waving in the background, are rapidly spreading on social media and television.