Joe Biden‘s exit from the 2024 US presidential race and an expected win for Donald Trump would spell a “loser” for China, an expert has said. Markets in Europe opened higher while Asian shares mainly fell after Mr Biden announced his withdrawal and endorsed Vice President Kamala Harris on Sunday (July 21).
The move fuelled uncertainties over the future of the world’s largest economy and raised questions as to which countries could win or lose should Mr Trump defeat Ms Harris in November.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, told Express.co.uk: “China would be a loser under Trump. There’s already talk of tariffs and we know from his past tenure Trump isn’t scared to get into a tit for tat with China when he feels the US isn’t get the upper hand on trade.
“That’s likely to be an inflationary force for the US and bond yields have already moved higher in anticipation of higher inflation under a Trump administration.”
He added major energy exporters would probably be happier to see Trump return to the White House, given he is likely to be more pro-fossil-fuels than the Democratic candidate.
Dan Coatsworth, investment analyst at AJ Bell, said China is likely to be “the big loser” if Trump gets back into power as he might seek to impose sweeping restrictions on the sale of US technology-related goods to the Asian country. That, or he may announce higher tariffs on Chinese goods sold in the US.
He told Express.co.uk: “Taiwan might also suffer under a Trump administration if he forces it to pay for US security guarantees and/or pushes for the US semiconductor industry to source equipment and components domestically. Taiwan is a major player in the global semiconductor industry and works with a lot of US companies such as Nvidia and Apple.
“A new Democrat president might not have such an aggressive manner towards China as Trump, but one cannot rule out a similar desire to stop the Asian country accessing valuable and sophisticated US technology for military use. A desire to protect US jobs and American businesses might also see a continuation of tariffs on Chinese imports.”
Stephen Innes of SPI Asset Management said Mr Biden’s decision had barely dented financial markets. He said: “US yields and the dollar opened slightly weaker in Asia but then rebounded, suggesting investors were fully clued into this outcome. The odds of a Trump victory also haven’t changed much.”
The FTSE 100 added 0.5 percent to 8,194.82 in early trading on Monday (July 22). Germany’s DAX rose 0.8 percent to 18,311.32 in early trading and the CAC 40 in Paris gained 0.8 percent to 7,596.64. The future for the S&P 500 was 0.3 percent higher and that for the Dow Jones Industrial Average edged up 0.1 percent.
In Asian trading, Japan’s benchmark Nikkei 225 slipped 1.2% to 39,599.00. The Hang Seng in Hong Kong added 1.3 percent to 17,635.88 and the Shanghai Composite index dropped 0.6 percent to 2,964.22.
Mr Coatsworth said the market appears to have welcomed Mr Biden’s withdrawal from the presidential race, given how futures prices imply a decent opening for Wall Street. He cautioned: “However, there is still a lot of uncertainty until the new Democratic candidate is confirmed.
“That means we could see heightened volatility over the next few weeks, with assets quickly changing direction depending on the latest comments from Washington.”
He said Ms Harris being endorsed by Mr Biden helps to avoid any panic on markets for now as she provides continuity and experience. AJ Bell’s analyst said the focus for markets in the near-term is likely to be investors reassessing any previous trades made when it looked like Mr Trump would get back into power.
Mr Britzman said besides general jitters, investors can expect sectors which have been given a boost in the so-called “Trump trade” to pull back a little now he faces an unknown opponent.
This includes sectors such as energy, banks, and bitcoin, given they are all expected to gain support from a Trump administration.
Hargreaves Lansdowne’s expert added: “A cautious pullback wouldn’t be a surprise, but Trump is still a clear favourite, so don’t expect any major shifts just yet.”