.jpg)
Written by Saqib Iqbal Ahmed
NEW YORK (Reuters) – U.S. stock futures and the dollar rose in early Asian trading on Friday as 2024 presidential candidates Joe Biden and his predecessor Donald Trump squared off in their first debate, with Trump seen as having put in a stronger performance than his opponent.
While the election is still four months away, investors expect a Trump presidency to mean lower corporate taxes, tighter trade relations and, consequently, higher stock prices and bond yields.
“Wall Street has been slightly higher over the last hour, which could be seen as a sign that Trump has made a better case – as we all know he is a friend of Wall Street,” said Matt Simpson, chief market analyst at City Index in Brisbane.
The US dollar rose to a 10-day high against the Mexican peso, and also rose against other trade-sensitive currencies, including the Canadian dollar.
Stock futures extended gains as the debate progressed, with E-minis up 0.3% and E-minis up 0.46%.
China’s CSI300 index rose 0.4% while Hong Kong’s index was flat as the two US presidential candidates discussed tariffs on China, with Trump criticising Biden for not doing more.
Biden, who appeared hoarse and hesitant at times, stumbled over his words on several occasions during the first half hour of the debate. Trump launched one attack after another, including regarding Biden’s handling of the economy, although fact-checkers deemed many of his comments misleading or false.
Biden acknowledged that inflation had pushed prices up significantly compared to the start of his term, but said he deserved credit for “getting things back on track” after the coronavirus pandemic.
Trump asserted that he oversaw “the greatest economy in the history of our country” before the pandemic struck, and said he took measures to prevent the economic decline from deepening further.
Carl Shamotta, chief market strategist at payments firm Corpay in Toronto, said Biden delivered a “disastrous performance” that led to a sharp rise in Trump’s odds of winning.
“This translates into a sharp decline in trade-sensitive currencies,” he added.
Both Biden and Trump have favored a tough trade stance with tariffs and the threat of them, particularly on China. But investors are concerned about the impact of tariffs on inflation.
Online prediction market PredictIt for the 2024 presidential election showed Biden’s odds dropping to 39% from 45% the day before, while Trump’s odds rose to 61% from 55%.
US Treasury yields rose slightly, with 10-year yields up 2 basis points to 4.313% and 5 basis points higher on the week but still about 20 basis points lower than June so far.
Analysts at JPMorgan noted that the Trump team has proposed broad tariffs on imports, which would raise prices, while restrictions on immigration would put upward pressure on wages, and extended tax cuts would likely increase government debt.
“Investors are hedging against a more isolationist shift in the US after the November elections,” said Shamota of Corbay.
However, some investors have cautioned against over-interpreting the moves in stock market futures.
“We are in the early days and there is still a lot to do,” said Tim Gresky, chief portfolio strategist at Ingalls & Snyder. “Don’t assume any outcome.”
