(Bloomberg) — The dollar slid and Treasuries rose after Joe Biden ended his reelection campaign and endorsed Vice President Kamala Harris. European stocks rebounded from their worst week this year.
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Market reaction to Biden’s decision has so far been fairly muted, with a Bloomberg gauge of the US currency’s strength slipping 0.1%, while the 10-year Treasury yield dropped 3 basis points. Democrats face the task of uniting around a new nominee with just weeks before their convention, and must rapidly make up ground against Republican frontrunner Donald Trump.
Investors have been wagering on Trump’s return to the White House for weeks, trimming holdings of long-term US bonds and buying Bitcoin, among other things. Now, they’re considering whether the “Trump Trade” is still on. The uncertainty may translate into volatility for markets, though for now, much of the attention is on earnings and the outlook for monetary policy.
“We are more focused on the cadence of the business cycle than on the outcome of the election,” said Morgan Stanley strategist Michael Wilson. “While markets have been digesting the rising odds of a Trump win, cyclical upside from here will likely be dependent on growth.”
In equities, Europe’s Stoxx 600 index rose 0.5%, clawing back some of last week’s 2.7% slump. US stock futures ticked higher.
Investors will have their hands full dealing with major earnings this week. Strategists at Morgan Stanley said companies in Europe have made a positive start to the second-quarter reporting season, with 29% beating profit expectations. Ryanair Holdings Plc failed to boost that track record Monday, falling 13% after the Irish budget carrier cut its outlook for ticket prices in the crucial summer travel period, saying fares will be “materially lower” in its second quarter as consumers grow more cautious.
In the US, Tesla Inc. and Alphabet Inc. will be the first of the “Magnificent Seven” to report on Tuesday. Analysts will likely press Elon Musk’s electric-vehicle giant on the progress of its plans for…
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