United States: The firing debate between US Republican Donald Trump and Democratic Vice President Kamala Harris, which saw betting markets lean in praise of Harris, have caused investors to quickly adjust their market master plans.
The political clash, which offered little new spotlight on economic policies but shaped public perceptions, triggered remarkable market movements.
Shares of Trump Media & Technology Group plunged 13 percent, reflecting growing uncertainty about Trump’s 2024 election chances. Other Trump-linked assets, including Bitcoin and cryptocurrency stocks, also declined. Meanwhile, solar stocks, perceived to benefit from a Harris success, saw significant gains, with the Invesco Solar ETF jumping 5 percent.
In over 20 states, there are now Trump abortion bans.
When Congress passes a bill to restore the protections of Roe v. Wade, as president, I will proudly sign it into law. pic.twitter.com/8kAfWgOiID
— Kamala Harris (@KamalaHarris) September 11, 2024
The debate featured intense share on topics ranging from immigration to the economy, though investors found few concrete details to alter market outlooks on key concerns like tariffs, taxes, and regulation. Still, online prediction markets shifted slightly toward Harris, with her odds improving to 55 cents from 53 cents on PredictIt, while Trump’s odds fell from 52 cents to 47 cents.
Alvin Tan, head of Asia FX strategy at RBC Capital Markets stated that, “There is a general side that Harris won the debate.” Although Tan noted that the contest remains closed, the perceived shift in favour of Harris led to immediate market responses.
The S&P 500 recently recorded its worst weekly percentage loss since March 2023, amid concerns over a weakening US economy and uncertainty about the Federal Reserve’s future interest rate cuts. Yet, despite these losses, the index is still up 15 percent for the year.
As the race remains tight in key battleground states, analysts believe that even a slight change in political fortunes could significantly influence market sentiment. According to Charu Chanana, head of FX Strategy at Saxo, the debate may have given Harris a curve, which could have broader market implications, especially for crypto and energy stocks.
Trump, a vocal supporter of cryptocurrency, has seen stocks related to his brand take a hit. Trump Media & Technology Group, whose stock is popular among retail traders, dropped to a post-IPO low of $15.30. Similarly, shares in cryptocurrency-related companies, like Riot Platforms, also fell, while Bitcoin hovered flat after a nearly 4 percent drop.
On the other hand, solar companies benefitted from Harris’s perceived gains. Solar energy stocks, long expected to thrive under a Democratic administration, surged, with solar ETF prices reversing some of their 25 percent losses for the year.
Healthcare stocks, particularly health insurers like Humana and CVS Health, also fell amid concerns that Harris’s proposals to lower drug prices could affect the sector’s profitability. Going ahead, Trump has promised lower corporate taxes and a stronger stance on trade tariffs. However, analysts warn that his policies could spur inflation. Harris, by contrast, plans to raise the corporate tax rate from 21 to 28 percent, which could pressure corporate profits, according to Wall Street.
Some investors, like Steve Chiavarone, senior portfolio manager at Federated Hermes, believe a Harris presidency could offer stability in bond markets while supporting tech and large-cap stocks. A Trump victory, however, could boost small-cap and cyclical companies, especially those focused on the domestic market.
As the political landscape continues to evolve, the market response to Tuesday’s debate reflects the high stakes of the 2024 presidential race, with investors closely monitoring each development for signs of further shifts in the balance of power.
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