By Saqib Iqbal Ahmed and Suzanne McGee
NEW YORK (Reuters) – Wall Road remained on edge as a intently watched debate between Republican Donald Trump and Democratic Vice President Kamala Harris late Tuesday gave traders little readability on key coverage points, at the same time as betting markets swung in Harris’ favor after the occasion.
In a combative debate, Trump and Harris clashed over every thing from the financial system to immigration and Trump’s authorized woes, as every sought a campaign-altering second in what has been a closely-fought race.
Their exchanges left traders with few new particulars on points that might sway markets, together with tariffs, taxes and regulation. Some observers, nonetheless, mentioned Harris carried out higher than anticipated and that it might proceed to sway costs for some property in coming days ought to traders resolve it improved her probabilities at gaining the White Home.
“Neither one in every of them made sturdy financial factors, however total Harris got here out of this higher than Trump,” mentioned Eric Beyrich, portfolio supervisor, Sound Revenue Methods, in Westchester, New York. “Markets actually don’t need strident statements; they need readability.”
On-line prediction market PredictIt’s 2024 presidential common election market confirmed Harris’ odds enhancing to 56% from 53% earlier than the talk, whereas Trump’s odds slipped to 48% from 52%.
Response in asset costs was muted. Inventory futures eased as the talk progressed, with the S&P 500 E-minis down 0.5% early Wednesday in Asia and Nasdaq 100 E-minis off 0.6%.
The greenback index, which measures the U.S. forex’s power towards six main friends, slipped 0.2%.
“I feel the talk isn’t going to vary many minds, as voters stay intently divided,” mentioned Sonu Varghese, world macro strategist on the Carson Group. “The one indication is that Harris moved forward in prediction markets however that also retains the race very shut.”
Nonetheless, some traders consider even a small shift in perceptions of the candidates might show important in a contest that might come right down to tens of 1000’s of votes in a handful of states. The 2 candidates are successfully tied within the seven battleground states prone to resolve the election, in response to polling averages compiled by the New York Occasions.
The talk “doesn’t appear to be having a serious affect on markets thus far, which aligns with the comparatively low volatility expectations heading into the occasion,” mentioned Shier Lee Lim, Lead FX and Macro Strategist for APAC at Convera. “That mentioned, the talk might nonetheless show to be a big catalyst for shifting election possibilities.”
Whereas the presidential race could be very a lot on traders’ minds, political issues have recently coalesced with extra quick market catalysts, together with worries over a doubtlessly softening U.S. financial system and uncertainty over how deeply the Fed might want to lower rates of interest, traders mentioned. 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 practically 15% this 12 months.
TAXES AND TARIFFS
Trump has promised decrease company taxes and a harder stance on commerce and tariffs. He has additionally mentioned a robust greenback hurts the U.S., although some analysts consider his insurance policies might spur inflation and finally buoy the forex.
Harris final month outlined plans to boost the company tax charge to twenty-eight% from 21%, a proposal that some on Wall Road consider might harm company earnings.
On Tuesday evening, Harris attacked Trump’s intention to impose excessive tariffs on international 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.
Trump defended his tariffs proposal and mentioned they’d not result in larger costs for Individuals.
The Chinese language yuan, which had come underneath stress within the U.S.-China commerce warfare throughout Trump’s time period, edged up towards the greenback.
“Kamala Harris succeeded in shifting prediction market odds in her favor, supporting a light, however broad-based enchancment in danger urge for food throughout forex markets,” mentioned Karl Schamotta, chief market strategist, at Corpay in Toronto.
Trump additionally criticized Harris for the persistent inflation through the Biden administration’s time period. Inflation, he mentioned, “has been a catastrophe for folks, for the center class, for each class.”
Nonetheless, financial insurance policies might be up within the air for some time longer.
“There wasn’t a lot substantive dialogue of coverage,” Carson Group’s Varghese mentioned. “Neither candidate advocated for vastly totally different financial insurance policies than at present in place. Finally, loads of financial insurance policies that we see carried out subsequent 12 months will rely upon the make-up of the Senate and the Home.”
(Reporting by Saqib Iqbal Ahmed and Suzanne McGee; Extra reporting by Rae Wee in Singpaore; Enhancing by Ira Iosebashvili, Megan Davies and Shri Navaratnam)