Trump media shares dip amid market unrest following Biden exit

After President Joe Biden announced his decision to withdraw from the re-election race, Trump Media shares fell by more than 3.6 per cent on Monday. Significant movement is occurring on the American stock market as investors await a deluge of data from key companies that are beginning to publish reports.

According to Barron's, the shares of the parent company of the Truth Social platform, whose majority shareholder is the Republican presidential candidate Donald Trump, reacted to the news of Biden's resignation by falling. Initially, the loss reached 3.6 per cent, but in the later hours, the company began to recover its losses.

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

This week, investors will focus more on the financial reports of companies rather than the political landscape. Many firms from the technology sector and other industries will present their quarterly results in the coming days, and investors are clearly already reacting to this.

Barron's emphasises that the echoes of Friday's system failure have not yet subsided. Shares of CrowdStrike, the company largely responsible for it, fell by 9.7 per cent, continuing losses after Friday's collapse, which reached 11 per cent. Microsoft, whose solutions were most affected, announced that around 8.5 million computers worldwide were disabled due to the failure.

One of the stars of the market was Nvidia. It recorded a share increase of 3.4 per cent. The reason might be Reuters' report 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.

Meanwhile, Starbucks shares fell by 3.2 per cent. On Friday, the stock rose by 6.9 per cent, reacting to reports from The Wall Street Journal.

Grzegorz Dróżdż, an analyst at Conotoxia Ltd. notes in his commentary that President Joe Biden's withdrawal from running in the autumn elections did not cause a strong reaction in most financial markets. However, it may temporarily prevent investors from making Donald Trump's return the main theme of summer trading. Noticeable movement occurred in the cryptocurrency market, which Trump seems to support more than the current administration. Bitcoin's exchange rate initially fell by 2.5 per cent, only to then rise by 4 per cent.

"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 already influenced the market. As a result, the iShares Semiconductor ETF fell by 11.5 per cent from its peaks, as Taiwan has a significant share in global semiconductor production. A similar reaction occurred in Japan's Nikkei 225, which fell by 7 per cent. However, the negative trend may be ending, as a significant portion of the bad news has already been priced into asset prices," the expert writes.

According to the analyst, Biden's decision is beneficial for emerging markets, but the lack of a strong reaction results from earlier speculations and waiting for the official nomination of Kamala Harris. "After Biden's disastrous performance in the debate and the attack on the Republican candidate, the evaluation of Trump's chances of returning increased from 52 to 69 per cent. Biden's withdrawal and Harris's endorsement reduced these chances to 60 per cent, the level before the attack," the expert concludes.