Trump’s presidential candidacy for 2024, a new opportunity for the 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 remains a low priority. for now.

Trump, who has launched relentless attacks on the integrity of the American vote since his defeat in the 2020 election, announced his offer at his Mar-a-Lago property in Florida, apparently with the goal of getting ahead of possible Republican rivals.

His spirited televised announcement comes after a disappointing demo in last week’s midterm congressional elections blamed by many Republicans and 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 it would, and with a weaker result in the interim exams it reduces the likelihood of a nomination,” said Joshua Crabb, head of Asia-Pacific equities at investment manager Robeco.

“The impact is only on the road if it gets good traction with the nomination.”

Politics has largely taken a backseat to Wall Street this year, with macroeconomic concerns and Federal Reserve politics act as key drivers of markets.

Meanwhile, Trump’s announcement did not surprise investors, as the former president had wired the possibility that he could run again for some time.

“This has got to be the worst kept secret on the planet,” said Bill Stone, chief investment officer at Glenview Trust Company. “There’s a lot of other things going on that have a higher priority, although that can obviously change overnight.”

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

It will most likely not look much like the current one, or the context that prevailed during Trump’s tenure, which spanned from 2017 to 2021 and was highlighted by comparatively low inflation and a far less aggressive Federal Reserve.

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

“But the other side of the coin is that (investors) also know that he creates what the markets absolutely hate: political instability.”

DIVIDED WE GIVE

Unlike Trump’s earlier offer, the discord within the Republican Party also worried some investors.

“If anything, his decision to run may accentuate the divisions that exist among Republicans, with many blaming him for his poor showing in the midterm elections,” said Shane Oliver, head of investment strategy at AMP in Sydney. “These divisions may even lessen the chance of a more market-friendly Republican administration winning the presidency in 2024, so some investors may view it as a negative for markets.”

The US stock market rose more than 50% between Trump’s upset victory in the 2016 election and his defeat in November 2020, despite volatility flashpoints such as the trade war with China and the severe but brief economic slowdown that accompanied the COVID-19 pandemic. .

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

Despite a recent rally, the S&P 500 (.SPX) It’s down about 16% for the year as of Tuesday, after the Federal Reserve delivered a series of giant rate hikes in its bid to combat inflation.

Investors are also eyeing Trump-linked stocks as an indicator of the former president’s outlook.

Digital World Acquisition Corp Stock (DWAC.O)The blank check company seeking to take Donald Trump’s social media company public fell 8.8% on Tuesday, while software developer Phunware Inc. (PHUN.O)which was hired by Trump’s 2020 re-election campaign to create a phone app, fell 4.7%.

both actions gathered earlier this month over reports that Trump was considering a third bid for the White House.

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

Our standards: The Thomson Reuters Trust Principles.

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