Trump's 2024 presidential bid breathes new life into markets

Trump’s 2024 presidential bid breathes new life into markets

NEW YORK, Nov 16 (Reuters) – Former President Donald Trump’s entry into the 2024 presidential race on Tuesday confirmed the world’s “worst-kept secret” and created another variable for markets that some say investors, remains a low priority for now.

Trump, who has launched relentless attacks on the integrity of the American vote since his defeat in the 2020 election, announced his candidacy at his Mar-a-Lago estate in Florida, ostensibly in an effort to edge out potential Republican rivals.

His spirited television announcement comes after a disappointing performance in last week’s midterm elections that many Republicans blame him for and as the party closes in on a 435-seat House of Representatives majority.

“I don’t think the announcement means as much as people thought – and with a weaker mid-term performance, it reduces the likelihood of an appointment,” said Joshua Crabb, head of Asia-Pacific equities at the investment manager Robeco.

“The impact is only on the track if he gets good traction with the nomination.”

Politics has largely retreated for Wall Street this year, with macroeconomic concerns and Federal Reserve policy acting as the main drivers of markets.

Trump’s announcement, meanwhile, came as little surprise to investors, as the former president had been telegraphing the possibility of him running again for some time.

“It has to be the worst-kept secret on the planet,” said Bill Stone, chief investment officer of the Glenview Trust Company. “There are a lot of other things going on that have a higher priority, although obviously that can change overnight.”

Of course, it’s hard to predict what kind of investment landscape the country’s next president will face.

It is unlikely to bear much resemblance to the current, or prevailing, context of Trump’s tenure, which ran from 2017 to 2021 and was characterized by relatively low inflation and a much less hawkish Fed.

“He’s the holy trinity of market lubrication – stimulus, through deficit spending, low interest rates – easy money – and a lack of regulation,” former communications director Anthony Scaramucci said on the sidelines. of the White House under Trump and founder of Skybridge Capital. of a conference in Singapore.

“But the flip side is (investors) also know it creates what the markets absolutely hate: political instability.”


Unlike Trump’s previous bid, the discord within the Republican Party has also worried some investors.

“If anything, his decision to run could deepen divisions among Republicans, with many blaming him for their poor showing in the midterm elections,” Shane Oliver, head of investment strategy at AMP, told AFP. Sidney. “These divisions could even reduce the odds that a more market-friendly Republican administration will win the presidency in 2024, so some investors may actually see it as a downside for markets.”

The US stock market rose more than 50% between Trump’s surprise election victory in 2016 and his defeat in November 2020, despite flashpoints of volatility such as the trade war with China and the severe economic slowdown but short-lived that accompanied the COVID-19 pandemic.

The Republican president claimed the rise, often tweeting about Wall Street’s performance.

Despite a recent rally, the S&P 500 (.SPX) is down about 16% for the year on Tuesday, after the Federal Reserve announced a series of giant rate hikes in its bid to fight inflation.

Investors are also watching Trump-related stocks as an indicator of the former president’s outlook.

Shares of Digital World Acquisition Corp (DWAC.O), the blank check company seeking to take Donald Trump’s social media business public, fell 8.8% on Tuesday, while software developer Phunware Inc (PHUN.O), which was hired by Trump’s 2020 re-election campaign to create a phone app, fell 4.7%.

Both stocks rallied earlier this month on reports that Trump was considering a third bid for the White House.

Reporting by David Randall, additional reporting by Vidya Ranganathan and Tom Westbrook; Editing by Lincoln Feast

Our standards: The Thomson Reuters Trust Principles.

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