Trump’s 2024 presidential bid a fresh wrinkle for markets

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

Trump, who has relentlessly attacked the integrity of the US vote since losing the 2020 election, announced his bid at his Mar-a-Lago estate in Florida, apparently aiming to get ahead of potential Republican rivals. .

His high-spirited televised announcement comes after a disappointing showing in last week’s congressional elections that many Republicans blamed and as the party closes in on a 435-seat majority in the House of Representatives.

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

“The impact is only down the track if he gets good traction with the nomination.”

Politics have largely taken a backseat to Wall Street this year, with macroeconomic concerns and Federal Reserve policy serving as the markets’ main drivers.

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Meanwhile, Trump’s announcement came as little surprise to investors, as the former president had telegraphed that he might run again for a while.

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

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

There is a chance, it is unlikely that it will be very similar to the current one, or to the background that was more in Trump’s term, which lasted from 2017 to 2021 and was notable for relatively low inflation and on a much less hawkish diet.

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

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

SOME OF WE HURT

Unlike during Trump’s previous bid, the discord within the Republican party also worried some investors.

“If anything, his decision to run could intensify the ongoing divisions among Republicans, with many blaming him for their poor midterm election showing,” said Shane Oliver, leader investment strategy at AMP in Sydney. “These divisions may even reduce the chances of a more market-friendly Republican administration winning the presidency in 2024 so some investors may see it as a negative for the markets.”

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

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The Republican president has claimed credit for the rise, tweeting frequently about Wall Street’s performance.

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

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

Shares of Digital World Acquisition Corp ( DWAC.O ), the blank check company trying to take Donald Trump’s social media ventures public, fell 8.8% on Tuesday, while software developer Phunware Inc ( PHUN.O ), hired who hired Trump’s 2020. re-election campaign to build a phone app, slis 4.7%.

Both stocks rallied earlier this month on 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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