NEW YORK (Reuters) -Investors scrambled to shift their positioning on Wednesday following a closely-watched debate between Republican Donald Trump and Democratic Vice President Kamala Harris, as betting markets swung in Harris’ favor after the event.
Shares of Trump Media & Technology Group, the company that owns the Truth Social, slumped around 14% in premarket trading, while solar stocks rallied.
The dollar edged lower against Asian currencies following the debate but rebounded after U.S. consumer price data. U.S. cryptocurrency shares fell in premarket trading, while bitcoin was off around 1.5%.
In a combative debate late Tuesday, Trump and Harris clashed over everything from the economy to immigration and Trump’s legal woes, as each sought a campaign-altering moment in what has been a closely-fought race.
Their exchanges left investors with few new details on issues that could sway markets, including tariffs, taxes and regulation. But online prediction markets showed bets on a stronger likelihood of a Harris win in November: Harris’ odds in PredictIt’s 2024 presidential general election market improved to 55 cents from 53 cents before the debate, while Trump’s odds slipped to 47 cents from 52 cents.
There is a “general view that Harris won the debate,” said Alvin Tan, head of Asia FX strategy at RBC Capital Markets in Singapore. “It’s obviously not a slam dunk for Harris, but the chances of a Trump victory have slipped a bit.”
The U.S. dollar was recently down 0.2% against a basket of currencies including the euro and Japanese yen. Stock futures were down around 0.3%, with investors awaiting consumer price data.
U.S.-listed shares of solar companies, seen as benefiting from a Harris win, rose between 2.2% and 7.2% in premarket trading.
At the same time, investors hammered the shares of Trump Media & Technology Group, which have been popular among retail traders and sensitive to the former president’s chances of a win in the 2024 election.
While the presidential race is very much on investors’ minds, political concerns have lately coalesced with more immediate market catalysts, including worries over a potentially softening U.S. economy and uncertainty over how deeply the Fed will need to cut interest rates, investors said. The S&P 500 notched its worst weekly percentage loss since March 2023 last week after a second-straight underwhelming jobs report, though the index is still up nearly 15% this year.
Still, some investors believe even a small shift in perceptions of the candidates could prove significant in a contest that could come down to tens of thousands of votes in a handful of states. The two candidates are effectively tied in the seven battleground states likely to decide the election, according to polling averages compiled by the New York Times.
“The US Presidential debate achieved its goal by providing a decisive edge to one of the candidates in what has been an exceptionally close race,” said Charu Chanana, Head of FX Strategy and Global Market Strategist at Saxo. “Crypto and energy stocks might face headwinds as market sentiment adjusts to the shifting political dynamics.”
Trump has positioned himself as a pro-cryptocurrency candidate.
TAXES AND TARIFFS
Trump has promised lower corporate taxes and a tougher stance on trade and tariffs. He has also said a strong dollar hurts the U.S., though some analysts believe his policies could spur inflation and eventually buoy the currency.
Harris last month outlined plans to raise the corporate tax rate to 28% from 21%, a proposal that some on Wall Street believe could hurt corporate profits.
On Tuesday night, Harris attacked Trump’s intention to impose high tariffs on foreign goods – a proposal she has likened to a sales tax on the middle class – while touting her plan to offer tax benefits to families and small businesses.
Trump defended his tariffs proposal and said they would not lead to higher prices for Americans.
The Chinese yuan, which had come under pressure in the U.S.-China trade war during Trump’s term, edged up against the dollar in early Wednesday trading.
Trump also criticized Harris for the persistent inflation during the Biden administration’s term. Inflation, he said, “has been a disaster for people, for the middle class, for every class.”
However, economic policies could be up in the air for a while longer.
“There wasn’t much substantive discussion of policy,” Carson Group’s Varghese said. “Neither candidate advocated for vastly different economic policies than currently in place. Ultimately, a lot of economic policies that we see implemented next year will depend on the makeup of the Senate and the House.”
Source: Economy - investing.com
