Trump Trades Volatile After Fiery Debate as Investors Consider Harris’s Chances, Says Reuters

By Saqib Iqbal Ahmed, Suzanne McGee, and Rae Wee

NEW YORK – Investors quickly adjusted their positions on Wednesday following a highly anticipated debate between Republican Donald Trump and Democratic Vice President Kamala Harris, with betting markets leaning in favor of Harris post-event.

The shares of Trump Media & Technology Group, which owns Truth Social, dropped by 13% on Wednesday afternoon, alongside a retreat in other assets associated with Trump, such as bitcoin and cryptocurrency stocks. Conversely, solar stocks, anticipated to gain from a Harris victory, surged, while healthcare shares experienced declines.

The debate saw a vigorous exchange between Trump and Harris on various issues, including the economy and immigration, as both candidates aimed to seize a pivotal moment in a tightly contested race. While the debate did not yield significant new insights on key topics like tariffs and taxes, online prediction markets indicated an increased probability of Harris winning in November. Harris’s odds improved from 53 cents to 55 cents, while Trump’s odds dipped from 52 cents to 47 cents.

"There is a general perception that Harris won the debate," commented Alvin Tan, head of Asia FX strategy at RBC Capital Markets. "While it’s not a definitive win for Harris, the chances of Trump securing victory have diminished slightly."

While the presidential election looms large in the minds of investors, political uncertainties are increasingly intertwining with immediate market factors, including concerns about a potentially weakening U.S. economy and speculation about the Federal Reserve’s interest rate adjustments. Recent data showed the market experiencing its steepest weekly percentage loss since March 2023 after a disappointing jobs report, although the index has seen approximately 15% growth this year.

Some investors are convinced that shifts in candidate perceptions could have a significant impact, particularly in a close contest that may hinge on a few thousand votes across key states. Polling averages indicate that the candidates are effectively tied in seven battleground states.

"The presidential debate achieved its goal by providing a decisive edge to one of the candidates in this unusually close race," noted Charu Chanana, Head of FX Strategy and Global Market Strategist at Saxo. "Crypto and energy stocks may face challenges as market sentiment adjusts to the evolving political landscape."

Trump has positioned himself as a pro-cryptocurrency candidate, complicating the political dynamics further.

Despite the difficulties in separating election-influenced movements from broader economic trends following Wednesday’s consumer price report, investors identified several areas where the debate had an apparent effect.

Trump Media & Technology Group shares, popular among retail traders and sensitive to Trump’s electoral prospects, saw a dramatic drop, plunging as much as 18% to a new post-IPO low. Meanwhile, some cryptocurrency-focused stocks, including a well-known mining company, also faced declines.

Shares of companies operating correctional facilities, which are perceived to benefit from stricter immigration policies, also fell. In contrast, U.S.-listed solar companies, favored under a Harris presidency, experienced gains, with one ETF rising 5% after a year-to-date decline of about 25%.

Health insurer stocks, such as those of Humana and CVS Health, also suffered losses. Analysts suggest that Harris’s initiative to lower drug prices might negatively affect this sector.

Tax and Trade Policies

Trump advocates for reduced corporate taxes and a more aggressive stance on trade and tariffs, arguing that a strong dollar has detrimental effects on the U.S. economy. Conversely, some analysts believe that his policies could lead to inflationary pressures that might uplift the currency.

Harris recently proposed raising the corporate tax rate from 21% to 28%, a suggestion that has raised concerns among some on Wall Street regarding its impact on corporate profits.

Steve Chiavarone, senior portfolio manager at Federated Hermes, indicated that under a Harris presidency—seen as less likely to exacerbate budget deficits through significant spending—could bolster Treasury prices and benefit large-cap growth and tech stocks. He also noted that Trump’s focus on tax cuts and tariffs could enhance small-cap stocks and cyclical industries while exerting pressure on bonds.

In the debate, Harris criticized Trump’s plans to impose high tariffs on foreign products, which she equated to a sales tax on the middle class, while promoting her approach to provide tax benefits for families and small businesses.

The dollar experienced slight gains against other currencies on Wednesday amid these discussions, even as Trump accused Harris of contributing to inflation during the Biden administration’s time in office.

Looking ahead, economic policies remain uncertain. "There wasn’t much substantive discussion of policy," remarked Sonu Varghese, global macro strategist at Carson Group. "Neither candidate proposed significantly different economic strategies than those currently in place. Ultimately, the economic policies we see implemented next year will largely depend on the composition of Congress."