Biden’s Withdrawal From Presidential Race Seemingly Welcomed By Wall Street

The major U.S. index futures are currently pointing to a higher open on Monday, with stocks likely to move to the upside following the mixed performance seen last week.

The upward momentum on Wall Street comes after President Joe Biden announced his decision to drop out of the presidential race and endorsed his Vice President Kamala Harris.

Biden has been under pressure to step aside after his disastrous debate performance raised questions about his fitness to serve another term as president.

While Republican nominee Donald Trump is seen as a more pro-business candidate, his return to the White House could also lead to increased trade tensions with China.

“The market appears to have welcomed Joe Biden’s withdrawal from the presidential race, given how futures prices imply a decent opening for Wall Street,” said Dan Coatsworth, investment analyst at AJ Bell.

“However, there is still a lot of uncertainty until the new Democratic candidate is confirmed,” he added. “That means we could see heightened volatility over the next few weeks, with assets quickly changing direction depending on the latest comments from Washington.”

Later in the week, focus is likely to shift to a report on personal income and spending in June, which includes readings on inflation said to be preferred by the Federal Reserve.

The data could have a significant impact on the outlook for interest rates, with the Fed currently widely expected to lower interest rates by a quarter point in September.

Stocks moved mostly lower during trading on Friday, with the Nasdaq and the S&P 500 extending the steep drop seen over the two previous sessions. The narrower Dow also moved to the downside, pulling back further off the record closing high set on Wednesday.

The major averages all finished the day firmly in negative territory. The Dow slumped 377.49 points or 0.9 percent to 40,287.53, the Nasdaq slid 144.28 points or 0.8 percent to 17,726.94 and the S&P 500 fell 39.59 points or 0.7 percent to 5,505.00.

For the week, the major averages turned in a mixed performance. The tech-heavy Nasdaq plunged by 3.7 percent and the S&P 500 tumbled by 2.0 percent, but the Dow climbed by 0.7 percent.

With concerns about the outlook for tech stocks recently weighing on Wall Street, negative sentiment may have been generated by a major IT outage.

The operations of major banks, media outlets, hospitals and airlines worldwide were affected due to the widespread outage, which was purportedly caused by an update by cybersecurity firm CrowdStrike (CRWD).

“CrowdStrike is actively working with customers impacted by a defect found in a single content update for Windows hosts,” the company’s CEO George Kurtz said on X. “Mac and Linux hosts are not impacted.”

“This is not a security incident or cyberattack,” he continued. “The issue has been identified, isolated and a fix has been deployed.”

Shares of CrowdStrike plunged by 11.1 percent, while shares of Microsoft (MSFT) have also moved to the downside as many of the software giant’s users have also been impacted by the issue.

“The underlying cause has been fixed, however, residual impact is continuing to affect some Microsoft 365 apps and services. We’re conducting additional mitigations to provide relief,” Microsoft said on X.

Overall trading activity was somewhat subdued, however, with a lack of major U.S. economic keeping some traders on the sidelines.

Semiconductor stocks saw substantial weakness on the day, dragging the Philadelphia Semiconductor Index down by 3.1 percent to its lowest closing level in over a month.

A steep drop by the price of crude oil also contributed to significant weakness among energy stocks, with the Philadelphia Oil Service Index and the NYSE Arca Oil Index falling by 1.4 percent and 1.2 percent, respectively.

Considerable weakness was also visible among computer hard stocks, as reflected by the 1.3 percent loss posted by the NYSE Arca Computer Hardware Index.

Gold, networking and tobacco stocks also saw notable weakness, while pharmaceutical stocks regained ground following Thursday’s sell-off.

Commodity, Currency Markets

Crude oil futures are falling $0.51 to $79.62 a barrel after plunging $2.69 to $80.13 a barrel last Friday. Meanwhile, after plummeting $57.30 to $2,399.10 an ounce in the previous session, gold futures are inching up $0.70 to $2,399.80 an ounce.

On the currency front, the U.S. dollar is trading at 157.03 yen versus the 157.48 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.0881 compared to last Friday’s $1.0882.

Asia

Asian stocks fell broadly on Monday as President Joe Biden announced his withdrawal from the 2024 presidential race against Donald Trump and China’s central bank unexpectedly lowered its one-year benchmark loan prime rate to bolster a slowing economy.

The dollar eased slightly as Biden endorsed Vice President Kamala Harris as the new Democratic nominee.

Gold held steady above $2,400 per ounce, while oil prices edged up slightly in Asian trading after having hit a four-week low on Friday.

China’s Shanghai Composite Index dropped 0.61 percent to 2,964.22, getting little lift from the surprise 10 basis point cut in short-term rates by the country’s central bank.

Hong Kong’s tech-heavy Hang Seng Index climbed 1.3 percent to 17,635.88 after a recent string of losses on concerns about U.S. restrictions against China’s semiconductor industry.

Japanese markets fell sharply to hit a three-week low as chip-related stocks such as Shin-Etsu Chemical, Tokyo Electron and Advantest tumbled 2-4 percent.

The Nikkei 225 Index slumped 1.2 percent to 39,599, extending losses for a fourth straight session. The broader Topix Index settled 1.2 percent lower at 2,827.53.

Seoul stocks fell, with battery and energy-related stocks pacing the declines. The Kospi ended 1.1 percent lower at 2,763.51.

LG Energy Solution slumped 4.9 percent, Samsung SDI gave up 4.2 percent, SK Innovation shed 3.9 percent and LG Chem fell over 4 percent.

Australian markets closed lower on valuation concerns. The benchmark S&P/ASX 200 Index dipped half a percent to 7,931.70, while the broader All Ordinaries Index ended down 0.5 percent at 8,166.40.

Woodside Energy fell 2.1 percent after it entered a definitive agreement to acquire U.S. liquefied natural gas developer Tellurian.

Diversified miner South 32 plummeted 12.6 percent after reporting $818 million of impairment charges.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index slipped 0.1 percent to 12,309.91.

Europe

European stocks have bounced back on Monday after suffering steep losses in the previous session following a global IT outage linked to issues at cybersecurity firm CrowdStrike.

The dollar slid, while Treasuries rose as investors weighed the implications of U.S. President Joe Biden’s exit from the presidential election.

Amid growing calls within his Democratic Party for his stepping down, Biden endorsed his Vice President Kamala Harris for the Democratic nomination.

While the U.K.’s FTSE 100 Index has advanced by 0.8 percent, the French CAC 40 Index and the German DAX Index are up by 1.3 percent and 1.4 percent, respectively.

In corporate news, Swiss heating and ventilation solutions maker Belimo Holding AG has moved sharply higher after raising its sales guidance.

Ocado Group has also jumped. The grocery technology company announced that U.S. grocery retailer Kroger Co. (KR) has placed an order for a wide range of new automated technologies to roll out in Customer Fulfilment Centres across its network.

Rentokil Initial has also soared on reports that former BT chief Philip Jansen is in talks to buy the British pest-control firm.

Entain has also rallied. The British gambling group named Gavin Isaacs, former chief of U.S.-based lottery games and betting firm Scientific Games Corp, as its new CEO.

Shopping centre owner Hammerson has also surged after selling its retail outlets business Value Retail for £1.5bn.

Airbus SE shares have also risen in Paris. Media reports suggest that the aerospace major has listed eight potential site locations for setting up its final assembly line for the H125 helicopters in India.

German wind turbine maker Nordex has also advacned after an announcement that it will launch its N169/5.X turbine with a power rating of up to 5.5 megawatts and 169-meter rotor diameter under its Delta4000 platform.

Meanwhile, Irish budget airline Ryanair has plunged after reporting a 46 percent decrease in quarterly profit. Peers Wizz Air Holdings and IAG Group have also tumbled.

U.S. Economic News

No major U.S. economic data is scheduled to be released today.