Trump’s 2024 presidential bid a fresh wrinkle for markets

NEW YORK, Nov 16 (Reuters) – Former U.S. President Donald Trump entered the 2024 presidential race on Tuesday, confirming the world’s “best-kept secret” and creating another wild card for markets, some investors said. It remains a low-priority issue at the moment.

Trump, who has launched a relentless assault on the integrity of America’s voting since his defeat in the 2020 election, announced his bid for his Mar-a-Lago estate in Florida, appearing to pre-empt potential Republican rivals.

He made a spirited statement on television after a disappointing performance in last week’s congressional midterm elections that many Republicans blamed on him and a near majority for the party in the 435-seat House of Representatives.

“I don’t think the announcement was as significant as people thought it would be – and the fact that the midterms were weaker made the nomination less likely,” said Joshua Crabb, head of Asia-Pacific equities at investment manager Robeco.

“Only when he has good support in the nomination will the impact be felt gradually.”

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Politics has largely taken a back seat to Wall Street this year, with macroeconomic concerns and Federal Reserve policy being the main drivers of markets.

Meanwhile, Trump’s announcement came as no surprise to investors, as the former president has said he may run again for a while.

“It’s got to be the worst-kept secret on the planet,” said Bill Stone, chief investment officer at Glenview Trust Company. “There are a lot of other things that need to be higher priorities, although that can obviously change overnight.”

Of course, it is difficult to predict what kind of investment climate the country’s next president will face.

In all likelihood, it is unlikely to bear much resemblance to the current situation or the backdrop that dominates the Trump presidency, which runs from 2017 to 2021 with relatively low inflation and a less hawkish policy. Known for the Federal Reserve.

“He’s the holy trinity of market lubricants — stimulating markets with deficit spending, low interest rates — easy money — and a lack of regulation,” said Anthony Scaramucci, who is Trump’s president, on the sidelines. The government’s former White House communications director and founder of Skybridge Capital, a conference in Singapore.

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“But the flip side is (investors) also know he’s created something the market absolutely hates: political instability.”

split us hurt

Unlike Trump’s last campaign, discord within the Republican Party also worries some investors.

“If anything, his decision to run is likely to exacerbate divisions among Republicans, with many blaming him for his poor performance in the midterm elections,” said Shane Oliver, head of investment strategy at AMP in Sydney. “These splits may even reduce the chances of a more market-friendly Republican administration securing the presidency in 2024, so some investors may actually see this as a negative view on markets.”

Between Trump’s surprise victory in the 2016 election and his defeat in November 2020, U.S. stocks rallied more than 50%, despite flashpoints of volatility such as the trade war with China and the coronavirus crisis that accompanied the COVID-19 pandemic. A severe but short-lived economic slowdown.

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The Republican president has claimed credit for rising stock prices, often tweeting about Wall Street’s performance.

Despite the recent rebound, the S&P 500 (.SPX) was still down about 16% for the year through Tuesday after the Fed unleashed a series of aggressive rate hikes to combat inflation.

Investors are also eyeing Trump-related stocks as a gauge of the former president’s prospects.

Shares of Digital World Acquisition Corp (DWAC.O ) fell 8.8% on Tuesday as the blank-check firm looked to take Donald Trump’s social media venture public, while software developer Phunware Inc (PHUN.O ) was sacked by Trump. The 2020 re-election campaign that hired to build mobile apps slipped 4.7%.

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

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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