Trump’s 2024 presidential bid a fresh wrinkle for markets

NEW YORK, Nov 16 (Reuters) – Former President Donald Trump’s entry into the 2024 presidential race on Tuesday confirmed the world’s “worst kept secret” and created another variable for markets that some investors say is still a low priority. remains.

Trump, who has launched repeated attacks on the integrity of the U.S. vote since his defeat in the 2020 election, announced his bid at his Mar-a-Lago estate in Florida in an apparent effort to fend off potential Republican challengers.

His spirited televised announcement comes after a disappointing showing in last week’s congressional midterm elections, which many Republicans blame, as the party closes in on a majority in the 435-seat House of Representatives.

“I don’t think the announcement means as much as people thought – and with a weaker showing in the medium term it reduces the likelihood of a lead,” said Joshua Crabb, head of Asia-Pacific equities at investment manager Robeco.

“The impact will only go down if he gets good traction with his candidacy.”

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Politics have taken a back seat for Wall Street this year, with macroeconomic concerns and Federal Reserve policy acting as the main drivers of the markets.

Meanwhile, Trump’s announcement came as a surprise to investors as the former president had telegraphed the possibility of his re-election bid.

“This has 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 are a higher priority, although that can certainly change overnight.”

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

It is unlikely to be similar to the current era or the backdrop dominated by the Trump era, which ran from 2017 to 2021 and featured relatively low inflation and a much smaller Fed.

“He is the Holy Trinity of market lubrication – stimulus through deficit spending, low interest rates – easy money – and lack of regulation,” Anthony Scaramucci, former White House communications director under Trump and founder of Skybridge Capital, said on the sidelines of a conference in Singapore.

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“But the flip side is that (investors) also know that it creates something that the markets absolutely hate: political instability.”

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Unlike Trump’s previous proposal, the rift within the Republican Party has also worried some investors.

“If anything, his decision to run could increase divisions among Republicans, with many blaming him for their poor mid-term elections,” said Shane Oliver, head of investment strategy at AMP in Sydney. “These splits may even reduce the chances of a Republican administration in 2024, so some investors will actually see it as a downside for the markets.”

Between Trump’s surprise victory in the 2016 election and his defeat in November 2020, the U.S. stock market rallied more, despite points of volatility such as the trade war with China and the sharp but short-lived economic downturn that accompanied the COVID-19 pandemic. exceeded 50%. .

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The Republican president took credit for the rise and often tweeted about Wall Street’s performance.

Despite the recent rally, the S&P 500 (.SPX) was down nearly 16% for the year through Tuesday after the Federal Reserve proposed a series of jumbo rate hikes in its bid to fight inflation.

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

Shares of Digital World Acquisition Corp ( DWAC.O ), the blank-cheque company seeking to take Donald Trump’s social media company public, fell 8.8 percent on Tuesday, while software developer Phunware Inc ( PHUN.O ), hired by the Trump 2020 re-election campaign to build a phone program, slide 4.7%.

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

Reporting by David Randall, additional reporting by Vidya Ranganathan and Tom Westbrook; Edited by Lincoln Fest

Our Standards: The Thomson Reuters Trust Principles.

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