NEW YORK: Investors and analysts reacted with shared concern after Donald Trump was shot in the ear during a campaign rally in Pennsylvania on Saturday, in what the FBI said it was treating as an assassination attempt.

The Trump campaign later said the former president was “doing well” and appeared to have suffered no major injury besides a wound on his upper right ear.

“As with any geopolitical event underpinned by mounting concern or outright fear - especially given the opening of the Republican convention - gold would have a strong bid, coupled with a pickup in demand for treasuries,” said Quincy Krosby, chief global strategist at LPL Financial in Charlotte, North Carolina

“In addition, the US dollar, which has been softening due to the market’s perception that the Federal Reserve (Fed) seems poised to cut rates in September, could gain if the safety trade gains momentum.

“If, however, a scenario unfolds that there’s a broader threat aimed at US officials, the equity market could open significantly lower, requiring the Fed to provide liquidity. At this point this narrative is highly unlikely.”

Jack Ablin, chief investment officer at Cresset Capital in Chicago, said: “The spectre of political violence introduces a whole new level of potential instability.

“It’s uncertainty and volatility, and of course markets don’t like that. It’s not an environment anyone wants to see.”

The attempted assassination probably enhances Trump’s “reputation for strength.”

Bond markets may repeat a trading pattern similar to after President Joe Biden’s debate performance against Trump, Ablin said, referring to a steeper treasury yield curve.

“Perhaps we see the market begin projecting longer-term rates higher, and anticipating lower short-term rates, because I think it’s clear that as president, Trump would push for lower rates right away,” Ablin added.

Steve Sosnick, chief strategist at Interactive Brokers in Greenwich said: “I’ll be looking to see if the October to December bump in VIX futures expands or if the treasury yield curve steepens.

“The former indicates concerns about electoral and post-electoral volatility, while the latter would indicate bond market concerns about Trump’s likelihood of replacing income taxes with tariffs.

“I’m not sure that this will have much of an impact on equity markets.

“Stock traders are not particularly good at pricing in events with a nebulous impact on revenues, earnings, cash flows, etc. and this weekend’s events fall into that category,” said Sosnick.

“Like everyone, I am appalled by the assassination attempt on former President Trump,” said John Chambers, former chairman of the Sovereign Ratings Committee, Standard & Poor’s in New York.

“It could harbinger a return to political violence, the likes of which the US experienced in the 1960s.

“Such an outcome would be grievous, but given the strength of US institutions, I don’t believe it would have an impact on ratings.”

Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin, said: “It was horrible to watch the video clips.

“From a purely markets perspective, the question is what it does to the odds of one candidate winning over the other?

“Will it throw Trump off his game, as these types of rallies are a key part of his campaign strategy?

“It could strengthen the resolve of his supporters to go to the voting booth. Voter turnout is the key to winning.”

In London, Tina Fordham, geopolitical strategist and founder of Fordham Global Foresight said the shooting further complicated the election outlook for Democrats, already divided over Biden’s future as a candidate.

“US political violence is sadly a feature and not a bug. The question now is how a nation, in which a significant proportion of citizens believe civil war is increasingly likely, will respond.

“We don’t expect there to be an initial reaction in financial markets.

“If anything, the near-term implication will be the acceleration of the consensus view in markets of a Trump victory.”

Ian Bremmer, president of Eurasia Group in New York, said: “I deeply worry that it presages much more political violence and social instability to come.

“This is the kind of thing we have seen historically in lots of countries facing instability and frequently does not end well.

“Democracy is not in crisis right now. This is a year of many, many elections and we’ve seen it in India, the world’s most populous country, with 1.5 billion people.

“We’ve seen it across the European Union, the largest common market. We’ve seen it France, in the United Kingdom, in Mexico - rich countries, poor countries, democracies, all.

“They have had free, fair elections with peaceful transitions. That is not what we are seeing right now in the United States,” said Bremmer.

“The United States is the only major democracy in the world today that is experiencing a serious crisis.”

Khoon Goh, head of Asia Research at ANZ, Singapore, said: “The probability of Trump winning has increased to 70% in the betting markets after the assassination attempt.

“I am not sure how markets will respond. The bitcoin rally could be on concerns of more civil unrest.

“We will likely see some risk off moves in the market open, but that should fade quickly.”

Nick Twidale, chief market analyst at Atfx Global in Sydney, said: “I think it probably increases Trump’s chances, and we will probably see some haven flows in the morning.”

Rong Ren Goh, portfolio manager at Eastspring Investments in Singapore, said: the shooting is likely to “bolster Trump’s support and further augments the positive momentum” he has been enjoying following the presidential debates two weeks ago.

“The market reaction function to a Trump presidency has been characterised by a stronger US dollar and a steepening of the US treasuries curve, so we might observe some of that this coming week if his election odds are assessed to have further improved following this incident.”

 - Reuters