The first presidential debate has ended and the stakes are as high as ever, as markets react to the first (and possibly only) face-off between Kamala Harris and Donald Trump. But can investors shake it off?
Over the next month, all eyes will be on the election taking place in the US, carefully analysing both candidates’ policy pledges. These are particularly relevant for global investors at a time of extreme division and when US equities are more dominant than ever, comprising a staggering 65% weight, for example, in the MSCI’s ACWI Index.
In a combative debate, Trump and Harris argued a range of topics related to the economy, immigration and the former’s convictions. However, watchers noticed a lack of detail regarding specific policies, particularly those related to taxation.
Overall, markets swung in Harris’ favour after the event, with online prediction market PredictIt’s 2024 raising the odds of a Democratic win to 56% from 53% before the debate. Harris, who only entered the race in July, also obtained the endorsement of superstar Taylor Swift.
“Neither one of them made strong economic points, but overall Harris came out of this better than Trump,” Eric Beyrich, portfolio manager, Sound Income Strategies, in Westchester, New York, told Reuters. “Markets really don’t want strident statements; they want clarity.”
Tuesday night, shortly after the conclusion of the debate, US stock futures slipped. The Dow Jones Industrial Average futures fell 172 points (0.42%). Meanwhile, the S&P 500 futures and Nasdaq 100 futures both dipped 0.52% and 0.68% respectively, as reported by CNBC. The dollar index slipped 0.2%.
Across the globe, Asia-Pacific markets were also lower on Wednesday, with Japan’s Nikkei leading losses in the region, dropping 1.57% during the trading session. Topix fell 1.8%. The yen’s surge to an eight-month high was attributed to a speech made by Bank of Japan board member Junko Nakagawa, reiterating that the central bank would continue to raise rates if the economy and inflation move in line with its forecasts.
European stock markets were expected to reach soft open, with Eurostoxx 50 futures 0.19% lower, German DAX futures little changed and FTSE futures down 0.17%.
The jury is, however, still out, and traders are now anticipating two key announcements: August’s consumer price index, set to be released on Wednesday, September 11; and the conclusion of the next meeting of the inflation committee of the US Federal Reserve, which is expected to bring forth the first rate cuts of the year.
