Dollar Slips as Biden Quits Race; Stocks Advance: Markets Wrap

(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 robotaxis. And investors will delve into the details of Google’s parent revenue boost from artificial intelligence.

In Asian trading, stocks continued to be dragged lower by a weak tech sector. Chinese bonds were a highlight, gaining after the central bank cut a policy interest rate. The country’s stocks fell, as investors continued to express disappointment at a lack of strong stimulus measures from a recent major Communist Party meeting.

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Elsewhere this week, traders will be focused on economic activity data in Europe, US second quarter growth and a Bank of Canada rate decision.

Key events this week:

Hong Kong CPI, Monday

Taiwan jobless rate, export orders, Monday

Mexico retail sales, Monday

Israeli Prime Minister Benjamin Netanyahu embarks on visit to Washington, Monday

EU foreign ministers meet in Brussels, Monday

Singapore CPI, Tuesday

Taiwan industrial production, Tuesday

India’s budget for fiscal year through March 2025, Tuesday

Turkey rate decision, Tuesday

Eurozone consumer confidence, Tuesday

Alphabet, Tesla, LVMH earnings, Tuesday

Malaysia CPI, Wednesday

South Africa CPI, Wednesday

Eurozone HCOB PMI, Wednesday

UK S&P Global PMI, Wednesday

Canada rate decision, Wednesday

IBM, Deutsche Bank earnings, Wednesday

ECB Vice President Luis de Guindos speaks, Wednesday

Hong Kong trade, Thursday

South Korea GDP, Thursday

US GDP, initial jobless claims, durable goods, merchandise trade, Thursday

G-20 finance ministers and central bankers meet in Rio de Janeiro, Thursday through Friday

Bitcoin 2024 conference in Nashville, Thursday through July 27

Japan Tokyo CPI, Friday

US personal income, PCE price index, University of Michigan consumer sentiment, Friday

Mexico trade, Friday

Some of the main moves in markets:

Stocks

The Stoxx Europe 600 rose 0.6% as of 8:26 a.m. London time

S&P 500 futures rose 0.2%

Nasdaq 100 futures rose 0.4%

Futures on the Dow Jones Industrial Average were little changed

The MSCI Asia Pacific Index fell 0.6%

The MSCI Emerging Markets Index fell 0.5%

Currencies

The Bloomberg Dollar Spot Index was little changed

The euro was little changed at $1.0886

The Japanese yen rose 0.6% to 156.49 per dollar

The offshore yuan was little changed at 7.2923 per dollar

The British pound rose 0.1% to $1.2928

Cryptocurrencies

Bitcoin fell 0.6% to $67,304.73

Ether fell 0.6% to $3,476.55

Bonds

The yield on 10-year Treasuries declined three basis points to 4.21%

Germany’s 10-year yield declined two basis points to 2.45%

Britain’s 10-year yield declined one basis point to 4.11%

Commodities

Brent crude rose 0.5% to $83.04 a barrel

Spot gold rose 0.1% to $2,403.65 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Joanna Ossinger, Richard Henderson, Winnie Zhu and Farah Elbahrawy.

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