Following the debate, many investors swiftly retreated from assets tied to a potential Trump victory, reacting to assessments that Kamala Harris had won decisively.
Reuters reported that investors were rapidly selling off assets anticipated to gain from Trump’s potential win. Notably, shares of Trump Media, where Trump holds a majority stake, dropped sharply, falling as much as 18% during the day. This marked the stock’s lowest level since its initial public offering in March before closing down 13%, a sharp reversal from a 10% rise the day before the debate.
Trump Media, which owns Truth Social, has seen its stock fluctuate in line with Trump’s electoral prospects. Matthew Tuttle, CEO of Tuttle Capital Management, told CNN, “I think if he loses, he has to sell, and DJT goes to $1. If he wins, he doesn’t sell, and DJT can make a run for it.”
Other assets, including Bitcoin and private prison companies expected to benefit from tough immigration policies, also declined. GEO Group, a company investing in private prisons in Florida, dropped over 6%, and CoreCivic, a private prison operator, fell by 2.5%.
In contrast, stocks expected to benefit from a Harris victory, like First Solar, surged by 15%. Invesco Solar ETF rose by 5%, indicating strength in solar-related companies.
Francesco Pesole, a currency strategist at ING Bank, noted that the market has sided with Vice President Harris. He wrote, “Markets seem to have awarded Harris a victory. In FX, a Trump win is associated with a stronger dollar trading on the soft side across the board.”
On the betting site PredictIt, Harris’s odds rose from $0.53 before the debate to $0.55 afterward, while Trump’s odds fell from $0.52 to $0.47.
Alvin Tan, head of Asian foreign exchange strategy at RBC Capital Markets, pointed out that while Harris’s performance in the debate didn’t secure a definitive victory, Trump’s chances appear to have slightly diminished. He noted that although the election is a significant factor, the more immediate market catalysts include concerns about a potential U.S. recession and uncertainties around the Federal Reserve’s interest rate decisions.
Bloomberg Intelligence experts have urged caution against making premature judgments about the election outcome. They emphasize that with eight weeks remaining until the election, it’s premature to declare a definitive winner. They point out the current lack of clarity regarding each candidate’s policies and note ongoing debate about how the markets will respond to different election scenarios.
Citigroup strategists echoed these sentiments, observing that while Harris appeared to have won the recent debate, the U.S. dollar is likely to remain strong through the November election. They anticipate a competitive race, suggesting that market attention will persistently center on former President Donald Trump’s policies in the weeks ahead.
Most Commented