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 remains a low priority for now .

Trump, who has waged relentless attacks on the integrity of American voting rights since his 2020 election defeat, announced his bid at his Mar-a-Lago estate in Florida, ostensibly with the aim of fending off potential Republican rivals.

His high-spirited televised announcement comes after a disappointing showing in last week’s midterm congressional elections that many Republicans blame him for and the party closer to 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 performance in the mid-term 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 track if he gets a good foothold with the nomination.”

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

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Trump’s announcement, meanwhile, came as little surprise to investors, as the former president telegraphed the possibility that he might run again for some time.

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

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

Chances are, it’s unlikely to have much in common with the current one, or with the backdrop that dominated Trump’s term, which ran from 2017 to 2021 and was notable for relatively low inflation and a far less phony Fed.

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

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“But the flip side is (investors) also know he’s creating what markets absolutely hate: political instability.”

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

“If anything, his decision to run could highlight the divisions going on among Republicans, with many blaming him for their poor mid-term election showing,” said Shane Oliver, head of investment strategy at AMP in Sydney. “These divisions may even reduce the chance of a more market-friendly Republican administration winning the presidency in 2024, so some investors may actually see this as a negative for markets.”

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

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The Republican president claimed credit for the rise and often tweeted 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 sizeable rate hikes in its bid to fight inflation.

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

Shares of Digital World Acquisition Corp ( DWAC.O ), the blank-check company that wants to go public with Donald Trump’s social media venture, fell 8.8% on Tuesday, while software developer Phunware Inc ( PHUN.O ), which Trump ‘s 2020 re-election campaign hired to build a phone app fell 4.7%.

Both stocks rose 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; Editing by Lincoln Feast

Our Standards: The Thomson Reuters Trust Principles.

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