CNBC Daily Open: Trump attends RNC, Dow record close, bitcoin ‘digital gold

This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

Dow record high
The Dow Jones Industrial Average closed at an all-time high after former President Donald Trump survived an assassination attempt. The S&P 500 hit an intraday high and Nasdaq Composite rose 0.4%. The prospect of Trump’s reelection is seen as a positive for small caps, the Russell 2000 gained 1.8%, touching its highest level since 2022 and recording a fourth straight positive day. The yield on the 10-year Treasury edged up as investors analyzed comments from Federal Reserve Chair Jerome Powell. U.S. oil prices declined.

Trump lauded at RNC
Former President Donald Trump was cheered and celebrated at the Republican National Convention in Milwaukee, his first appearance since an assassination attempt at a Pennsylvania rally. Sporting a bandage over his right ear, Trump appeared in good spirits. The crowd erupted in cheers and chants of “Fight! Fight! Fight!” as he entered the arena and waved to the audience. Earlier, Trump chose Senator JD Vance of Ohio as his vice presidential running mate for the 2024 election. Meanwhile, Elon Musk has reportedly said he is planning to pledge about $45 million a month to a newly formed super PAC supporting Trump. 

Fed may not wait
Powell said the central bank will not wait until inflation reaches its 2% target to cut interest rates. Due to the delayed effects of monetary policy, “if you wait until inflation gets all the way down to 2%, you’ve probably waited too long, because the tightening that you’re doing, or the level of tightness that you have, is still having effects which will probably drive inflation below 2%,” Powell said.

Bitcoin ‘digital gold’
BlackRock CEO Larry Fink, initially a bitcoin skeptic, now sees the cryptocurrency as “digital gold” and a potential safe haven for investors concerned about political instability and rising government debt. Fink believes bitcoin can offer uncorrelated returns and act as a hedge against currency debasement caused by excessive deficits. “I believe it is an instrument that you invest in when you’re more frightened though. It is an instrument for when you believe countries are debasing their currencies by excess deficits, and some countries are,” Fink told CNBC’s “Squawk on the Street.” 

Asia markets mixed, Nifty hits high
The Asia-Pacific markets were mixed as investors weighed Powell’s dovish comments and former President Donald Trump’s choice for vice-presidential running mate, JD Vance, who has been critical of China. Hong Kong’s Hang Seng index dropped 1.37%, while mainland China’s CSI 300 rose 0.21%. India’s benchmark Nifty 50 hit an all-time high, Japan’s Nikkei 225 rose as markets resumed trading after a public holiday, and South Korea’s Kospi inched higher. Australia’s S&P/ASX 200 fell marginally, retreating from the index’s all-time closing high on Monday.

[PRO] ‘Super 8’
UBS has updated its “Super 8” list of top Asian tech stocks, seen as alternatives to the US “Magnificent Seven.” These stocks are expected to outperform the rest of Asia over the next year due to strong earnings growth and attractive valuations compared to global tech peers.

Not only did Trump Media see shares soar 30% following the assassination attempt on former President Donald Trump, cryptocurrency also got a boost. This surge comes as political betting platform PredictIt suggests Trump is likely to win November’s election by a wide margin following the attempt on his life. The connection to crypto? Trump recently raised $12 million at a fundraiser hosted by tech venture capitalists David Sacks and Chamath Palihapitiya, where he criticized Democrats’ attempts to regulate the cryptocurrency sector.

At this point, financial markets are largely behind the Trump trade.

“The market, I mean, will prefer Trump. He’s more free market, he’s antiregulatory, for growth,” Wharton School finance professor Jeremy Siegel told CNBC’s “Squawk Box” on Monday.

But that growth comes at a price.

“On growth, if we have a red sweep, I think its more likely that we’re going to have more tax cuts — more than the 2017 tax cuts extended after the current expiration in late 2025. So that would certainly be a relative benefit for growth, albeit with higher deficits,” Michael Feroli, JPMorgan chief U.S. economist, told CNBC.

“The deficit is not on a good trajectory, even under current policy, and if extend all the tax cuts, which will probably happen under any scenario but perhaps a little bit more under a red wave, you’re looking at a pretty harrowing situation for issuance.” 

Goldman Sachs suggests a Trump second term could sustain the recent small-cap rally. The Russell 2000 gained 6% last week and 1.8% on Monday.

“The big wild card, on trade and immigration policy, there are a lot of unknowns, and if you go back to 2019, the first trade war, it did have a chilling effect on business sentiment and maybe some of that can be offset by deregulation,” Feroli said. “We really are entering an environment of pervasive uncertainty if you look at policy next year.”

Christopher Harvey, head of equity strategy at Wells Fargo Securities, told CNBC, “As the polls go up for Trump, you get a little bit more certainty, yes we can argue whether we are going to have tariffs or not have tariffs, but the probability of Trump that’s been good for the market. So that certainty is a small positive and that’s why you have seen the market go up.” 

“Regulation is coming down, who is that good for? That’s good for the banks, that’s good for the capital markets, M&A, IPOs and that’s where I think you can make money in this market.”

— CNBC’s MacKenzie Sigalos, Alex Harring, Yun Li, Hugh Son, Sarah Min, April Roach, Jesse Pound, Charmaine Jacob, Rebecca Picciotto and Amala Balakrishner contributed to this report.