The US stock market experienced a slight downturn, with futures slipping and the dollar edging lower in early Asian trading on Wednesday. This subtle shift in market sentiment coincided with the first debate between President Donald Trump and Vice President Kamala Harris. While analysts generally agreed that the debate didn’t offer any major policy breakthroughs, many observed that Harris appeared to have delivered a stronger performance.
The impact of the debate was evident in the online prediction market, PredictIt. Immediately following the debate, Harris’ odds of winning the 2024 presidential election improved to 55% from 52%, while Trump’s odds dipped to 47% from 51%. This shift in perception was reflected in the stock market, with the S&P 500 E-minis dropping by 0.4% and the Nasdaq 100 E-minis falling 0.5%. The dollar index, which measures the US currency’s strength against six major peers, also weakened by 0.2%.
Market analysts offered their perspectives on the debate’s impact and the broader economic landscape. Onu Varghese, Global Macro Strategist at Carson Group, acknowledged the close division among voters and suggested that the debate was unlikely to sway many opinions. He highlighted that while Harris gained ground in prediction markets, the race remained extremely tight. Varghese also pointed out the lack of substantial policy discussions, stating that neither candidate advocated for significantly different economic policies than those currently in place. He emphasized that the implementation of future economic policies would heavily depend on the composition of the Senate and House, as well as negotiations surrounding the extension of the Tax Cut and Jobs Act.
Gregory Faranello, Head of U.S. rates at Amerivet Securities, expressed his view that Vice President Harris had performed well, holding her own against President Trump. However, he noted that no major breakthroughs or decisive moments emerged. Faranello emphasized the ongoing tightness of the election and suggested that the market’s immediate focus would likely be on monetary policy rather than the election outcome.
Steve Sosnick, Chief Market Strategist at Interactive Brokers, observed the general nature of the debate discussions, touching upon topics like semiconductors, energy, and solar, but lacking specific details. Sosnick pointed to the market’s uncertainty about the campaign’s trajectory, noting that while Harris seemed to be outperforming Trump, the markets hadn’t yet reflected a clear opinion. He suggested that a more significant market reaction might occur as soundbites from the debate spread and are discussed in the coming days.
Rob Carnell, Ing’s Regional Head of Research for Asia-Pacific, echoed the sentiment that the debate offered little for markets to latch onto, particularly in terms of economic implications. He observed Harris effectively managing Trump throughout the discussion. Carnell suggested that the dollar’s slight weakening might be indicative of the market’s perception of Harris’ performance.
Ken Cheung, Director, FX Strategy at Mizuho Securities Asia, highlighted the sensitivity of the Chinese yuan to Trump’s tariff policies, potentially impacting the US dollar’s movement.
Jack Ablin, Chief Investment Officer at Cresset Capital, emphasized the close nature of the election, suggesting that the debate wasn’t likely to alter the outcome significantly. He praised the debate moderators for effectively managing the discussion and providing voters with a clear picture of the candidates’ policies and approaches. However, he ultimately concluded that voter sentiment, particularly concerning their perception of personal economic well-being, would ultimately determine the election results.
Karl Schamotta, Chief Market Strategist at Corpay in Toronto, summarized the situation succinctly. He emphasized the lack of a decisive moment in the debate, while highlighting Harris’s slight lead in prediction markets and the corresponding weakening of the dollar. He also pointed out that currencies potentially vulnerable to trade tensions, such as the Mexican peso, Canadian dollar, and Chinese renminbi, were experiencing gains amid muted trading volumes.
