By Saqib Iqbal Ahmed and Suzanne McGee
NEW YORK (Reuters) – Wall Avenue remained on edge as a carefully 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 all the things from the economic 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, nevertheless, mentioned Harris carried out higher than anticipated and that it might proceed to sway costs for some belongings in coming days ought to traders determine it improved her probabilities at gaining the White Home.
“Neither one of them made strong economic points, but overall Harris came out of this better than Trump,” mentioned Eric Beyrich, portfolio supervisor, Sound Earnings Methods, in Westchester, New York. “Markets really don’t want strident statements; they want clarity.”
On-line prediction market PredictIt’s 2024 presidential basic election market confirmed Harris’ odds bettering to 56% from 53% earlier than the controversy, whereas Trump’s odds slipped to 48% from 52%.
Response in asset costs was muted. Inventory futures eased as the controversy progressed, with the E-minis down 0.5% early Wednesday in Asia and E-minis off 0.6%.
The , which measures the U.S. foreign money’s power in opposition to six main friends, slipped 0.2%.
“I think the debate is not going to change many minds, as voters remain closely divided,” said Sonu Varghese, global macro strategist at the Carson Group. “The only indication is that Harris moved ahead in prediction markets but that still keeps the race very close.”
Still, some investors believe even a small shift in perceptions of the candidates could prove significant in a contest that could come down to tens of thousands of votes in a handful of states. The two candidates are effectively tied in the seven battleground states likely to decide the election, according to polling averages compiled by the New York Times.
The debate “does not seem to be having a major impact on markets so far, which aligns with the relatively low volatility expectations heading into the event,” said Shier Lee Lim, Lead FX and Macro Strategist for APAC at Convera. “That said, the debate could still prove to be a significant catalyst for shifting election probabilities.”
While the presidential race is very much on investors’ minds, political concerns have lately coalesced with more immediate market catalysts, including worries over a potentially softening U.S. economy and uncertainty over how deeply the Fed will need to cut interest rates, investors said. The S&P 500 notched its worst weekly percentage loss since March 2023 last week after a second-straight underwhelming jobs report, though the index is still up nearly 15% this year.
TAXES AND TARIFFS
Trump has promised lower corporate taxes and a tougher stance on trade and tariffs. He has also said a strong dollar hurts the U.S., though some analysts believe his policies could spur inflation and eventually buoy the currency.
Harris last month outlined plans to raise the corporate tax rate to 28% from 21%, a proposal that some on Wall Street believe could hurt corporate profits.
On Tuesday night, Harris attacked Trump’s intention to impose high tariffs on foreign goods – a proposal she has likened to a sales tax on the middle class – while touting her plan to offer tax benefits to families and small businesses.
Trump defended his tariffs proposal and said they would not lead to higher prices for Americans.
The , which had come under pressure in the U.S.-China trade war during Trump’s term, edged up against the dollar.
“Kamala Harris succeeded in shifting prediction market odds in her favor, supporting a light, however broad-based enchancment in threat urge for food throughout foreign money markets,” mentioned Karl Schamotta, chief market strategist, at Corpay in Toronto.
Trump additionally criticized Harris for the persistent inflation throughout the Biden administration’s time period. Inflation, he mentioned, “has been a disaster for people, for the middle class, for every class.”
Nonetheless, financial insurance policies could possibly be up within the air for some time longer.
“There wasn’t much substantive discussion of policy,” Carson Group’s Varghese mentioned. “Neither candidate advocated for vastly different economic policies than currently in place. Ultimately, a lot of economic policies that we see implemented next year will depend on the makeup of the Senate and the House.”
