Buyers are scrambling to shift their positioning following the closely-watched debate between US Republican Donald Trump and Democratic Vice President Kamala Harris, as betting markets swung in Harris’s favour after the occasion.
Shares of Trump Media & Expertise Group, the corporate that owns Reality Social, fell 13 p.c on Wednesday afternoon, whereas different so-called Trump trades comparable to Bitcoin and crypto shares retreated. Photo voltaic shares, seen as benefitting from a Harris win, rallied and healthcare shares fell.
In a combative debate late Tuesday, Trump and Harris clashed over every thing from the economic system to immigration, as every sought a campaign-altering second in what has been a closely-fought race.
Their exchanges left traders with few new particulars on United States points that would sway markets, together with tariffs, taxes and regulation. However on-line prediction markets confirmed bets on a stronger probability of a Harris win in November: Harris’s odds in PredictIt’s 2024 presidential normal election market improved to 55 cents from 53 cents earlier than the controversy, whereas Trump’s odds slipped from 52 cents to 47 cents.
There’s a “normal view that Harris won the debate,” stated Alvin Tan, head of Asia FX technique at RBC Capital Markets in Singapore. “It’s clearly not a slam dunk for Harris, however the possibilities of a Trump victory have slipped a bit.
Whereas the presidential race may be very a lot on traders’ minds, political considerations have currently coalesced with extra instant market catalysts, together with worries over a doubtlessly softening US economic system and uncertainty over how deeply the US Federal Reserve might want to minimize rates of interest.
The S&P 500 notched its worst weekly proportion loss since March 2023 final week after a second-straight underwhelming jobs report, although the index remains to be up round 15 p.c this 12 months.
Nonetheless, some traders consider even a small shift in perceptions of the candidates may show important in a contest that would come right down to tens of hundreds of votes in a handful of states. The candidates are successfully tied within the seven battleground states prone to determine the election, in line with polling averages compiled by the New York Occasions.
“The US presidential debate achieved its objective by offering a decisive edge to one of many candidates in what has been an exceptionally shut race,” stated Charu Chanana, head of FX Technique and international market strategist at Saxo. “Crypto and vitality shares may face headwinds as market sentiment adjusts to the shifting political dynamics.”
Trump has positioned himself as a pro-cryptocurrency candidate.
Debate affect
Buyers pointed to a number of corners of the market the place the controversy appeared to have made an affect.
Buyers hammered the shares of Trump Media & Expertise Group, which have been common amongst retail merchants and delicate to the previous president’s possibilities of a win within the 2024 election. The inventory fell by as a lot as 18 p.c to a brand new post-IPO low of $15.30. Bitcoin was about flat on the day after slipping practically 4 p.c, whereas shares of some cryptocurrency-focused firms together with crypto miner Riot Platforms additionally fell.
Inventory of operators of correctional amenities, together with GEO Group and CoreCivic, seen as prone to profit from more durable immigration insurance policies, additionally slipped.
On the identical time, US-listed shares of photo voltaic firms, seen as benefitting from a Harris win, rose. The Invesco Photo voltaic ETF, down about 25 p.c for the 12 months, jumped 5 p.c on Wednesday.
Well being insurer shares together with Humana and CVS Well being have been additionally down on Wednesday. Some analysts consider Harris’s push to decrease drug costs might weigh on the sector.
Taxes and tariffs
Trump has promised decrease company taxes and a more durable stance on commerce and tariffs. He has additionally stated a powerful greenback hurts the US, although some analysts consider his insurance policies may spur inflation and ultimately buoy the forex.
Harris last month outlined plans to lift the company tax fee to twenty-eight p.c from 21 p.c, a proposal that some on Wall Road consider may damage company income.
Steve Chiavarone, senior portfolio supervisor at Federated Hermes, stated a Harris presidency, seen as much less prone to widen finances deficits by means of increased spending, may assist help Treasury costs whereas additionally boosting large-cap development and tech shares.
US-focused insurance policies comparable to tax cuts and tariffs in a Trump presidency may buoy small-cap shares and cyclical firms whereas hurting bonds, he stated.
On Tuesday night time, Harris attacked Trump’s intention to impose excessive tariffs on overseas items – a proposal she has likened to a gross sales tax on the center class – whereas touting her plan to supply tax advantages to households and small companies.