The heated debate gives Wall Street a few new insights into key issues via Reuters
By Saqib Iqbal Ahmed and Suzanne McGee
NEW YORK (Reuters) – Wall Street remained on edge as the much-watched debate between Donald Trump and Democratic Vice President Kamala Harris late on Tuesday left investors unclear on key policy issues, with betting markets favoring Harris after the event.
In a contentious debate, Trump and Harris sparred over everything from the economy to immigration and Trump’s legal troubles, as each sought a moment to turn the campaign around in a hotly contested race.
Their exchange left investors with few new details on issues that could move the markets, including tariffs, taxes and regulations. Some observers, however, say that Harris has performed better than expected and that he may continue to change the prices of certain assets in the coming days if investors decide that it improves his chances of getting the White House.
“Neither of them scored very well on the economy, but Harris came out better than Trump,” said Eric Beyrich, portfolio manager, Sound Income Strategies, in Westchester, New York. “Markets don’t really want strong statements; they want clarity.”
Online prediction market PredictThe 2024 presidential election market showed Harris’ odds improving to 56% from 53% before the debate, while Trump’s odds fell to 48% from 52%.
The reaction to commodity prices has been muted. Stock futures rose as the debate continued, with E-minis down 0.5% early Wednesday in Asia and E-minis down 0.6%.
The , which measures the strength of the US currency against six major peers, fell 0.2%.
“I think the debate is not going to change a lot of minds, as the electorate is always very divided,” said Sonu Varghese, global strategist at the Carson Group. “The only indication is that Harris has moved ahead in the prediction markets but that still keeps the race. Close.”
Still, some investors believe that even a small change in the candidates’ opinions could prove significant in a contest that could come down to tens of thousands of votes in several states. The two candidates are tied in seven districts that could decide the election, according to polling statistics compiled by The New York Times.
The debate “doesn’t seem to have had much of an impact on the markets so far, consistent with low volatility expectations heading into the event,” said Shier Lee Lim, Lead FX and Macro Strategist for APAC at Convera. “That being said, the debate can still be a major factor in changing the chances of the election.”
While the presidential race is largely on investors’ minds, political concerns have recently mixed with market incentives, including worries about a possible softening of the US economy and uncertainty about how deeply the Fed will need to cut interest rates, investors said. The S&P 500 posted its worst weekly percentage loss since March 2023 last week after a second negative jobs report, although the index is still up about 15% this year.
TAXES AND FEES
Trump has promised lower corporate taxes and a tough stance on trade and tariffs. He also said a strong dollar was hurting the US, although some analysts believed his policies could encourage inflation and save money.
Harris last month revealed 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 plan to impose higher tariffs on foreign goods — a proposal he likened to a sales tax on the middle class — while touting his plan to give tax breaks to families and small businesses.
Trump defended his proposed tariffs, saying they would not lead to higher prices for Americans.
The US, under pressure from the US-China trade war during Trump’s tenure, opposed the dollar.
“Kamala Harris has succeeded in changing the market’s forecasting opportunities for her, supporting a soft, but based on risk appetite in all financial markets,” said Karl Schamotta, chief market strategist, Corpay in Toronto.
Trump also criticized Harris for continued inflation during the Biden administration. Inflation, he said, “has been a disaster for people, for the middle class, for all classes.”
However, economic policies may be up in the air for a long time.
“There hasn’t been a lot of substantive discussion about policy,” said Varghese of the Carson Group. “No candidate stands for more different economic policies than they do now. Ultimately, many of the economic policies we see implemented next year will depend on the makeup of the Senate and the House.”
