Following a failed assassination attempt, Donald Trump’s chance of winning the US election has risen and this may contribute to greater market volatility in the short term, according to OCBC.

This weekend on July 13, Donald Trump was the victim of a failed assassination attempt during a rally in Pennsylvania. Although Trump was not fatally wounded, a bullet pierced the upper part of his right ear while one member of the audience was killed with another two injured. The shooter was also subsequently killed.

According to OCBC, the assassination attempt has further raised Trump’s chances of winning the US election which could contribute to market turbulence.

Election Odds

As per prediction website PredicIT, Trump’s chances of an election victory are currently projected at 67 percent compared to 60 percent before the shooting and 55 percent before the Trump-Biden debate on June 27. Vasu Menon, managing director, investment strategy at OCBC, said that the iconic images of Trump raising his fist and a bloody right ear are seen by his supporters as «a metaphor for the former president’s resiliency». 

«Sympathy votes could increase the odds of a Trump victory as more of his supporters may now feel the need to turnout at polling booths in November to vote for him. This is an important factor because voter turnout matters in US Presidential elections,» Manon commented in a note. 

«History is also in Trump’s favor as the last assassination attempt of a US President took place in March 1981, and it boosted then-President Ronald Reagan’s opinion poll rating by 22 points.» 

Short-Term Volatility

As a result of the greater odds of a Trump victory, Manon said that there could be «greater nervousness and market volatility in the short term». 

«However, what markets will be watching out for is what he will say at the convention, especially regarding the shooting and whether this will boost his chances of winning even further,» he added. «Investors will also be watching nervously to see if he shares further insights on his policies if elected in November, and who he will pick as his Vice President.»

Medium-Term Outlook Intact

However, Manon said that investors should not allow this short-term turbulence to «spook them into inaction» with «good reason to remain hopeful about the prospects over the next two to three years». 

Firstly, Trump’s previous presidency between 2017 and 2020 saw the S&P 500 index rally nearly 70 percent, demonstrating that the economy, earnings and liquidity may matter more than geopolitics. Secondly, Trump has historically referred to stock market performance as a testament to his performance as a president, so he may not take a drastic path as a result if he takes office. 

Stable Political System

Thirdly, Manon highlighted that the US political system is designed to be «inherently stable».

«Even if the Republicans take full control of the presidency and US Congress, they may not be able to overhaul the entire system. There is still a third branch of the US federal government they will need to contend with – the US judiciary – which can intervene if necessary,» he said.

 «In a nutshell, there is no need for investors to panic despite the greater odds of a Trump presidency after the latest shooting. It will probably add another layer of uncertainty to the investment landscape, but it may not derail markets in the medium term.»