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The failed assassination attempt on former President Donald Trump is expected to dominate markets this week as investors focus on the so-called "Trump trade."
The Trump trade reflects the pricing of a Trump presidency agenda that 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.
Even before the weekend events, economists and analysts were already debating what a Trump presidency would mean for the markets.
Investors are now reassessing Trump's chances at the polls later this year, as his reelection could bring about policy shifts that would impact the market.
Following the shooting on Saturday, bitcoin rose above $60,000 and was trading at about $62,760 at 6:30 a.m. ET Monday. Gold, a traditional safe haven, was little changed at about $2,400 an ounce.
In the short-term, investors will be looking to bitcoin and gold as havens to hedge against political instability in the US, wrote Rodda.
Meanwhile, shares in Trump's media company surged as much as 70% in pre-market trading on Monday, and were last up 48% at just under $31. TMTG owns Trump's Truth Social platform and made its stock market debut in late March.
Investors are expecting deregulation if Trump wins the presidential election, sending up S&P 500 and Nasdaq futures 0.3% and 0.4%, respectively.
US Treasury futures slipped while the dollar was slightly higher on expectations of tougher trade policies.
Despite US political uncertainty, stock markets were muted early on Monday.
Hong Kong's Hang Seng Index was down 1.4% following China's disappointing second-quarter growth data release. Tokyo was shut for a public holiday.
London's FTSE 100 was trading marginally lower, as were markets in Paris and Frankfurt.
Even so, investors will consider Trump when positioning themselves for the rest of this year.
"The weekend's attempted assassination of former US President Donald Trump will color everything in the markets to kick off," wrote Rodda.
"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.
