Saqib Iqbal Ahmed
NEW YORK (Reuters) – U.S. stock and dollar futures rose in early Asian trade on Friday as 2024 presidential candidates Joe Biden and his predecessor Donald Trump clashed in their first debate, with Trump seen as showing more stronger results than his opponent.
Although the election is four months away, investors expect a Trump presidency to mean lower corporate taxes, tighter trade relations and therefore higher stock prices and bond yields.
“Wall Street indices have risen over the last hour, which could be seen as a sign that Trump has done better as we all know he is friendly to Wall Street,” said Matt Simpson, senior market analyst at City Index in Brisbane.
The U.S. dollar rose to a 10-day high against the Mexican peso and rose against other trade-sensitive currencies including the Canadian dollar.
As the debate progressed, stock futures continued to rise, 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 unchanged as the two US presidential candidates discussed tariffs on China and Trump criticized Biden for not doing more.
Biden, who at times sounded hoarse and unsure, stumbled over his words several times during the first half hour of the debate. Trump rattled off one attack after another, including about Biden’s handling of the economy, although fact checkers found many of his comments to be misleading or false.
Biden acknowledged that inflation has driven prices up significantly since the start of his term, but said he deserves credit for “putting it all back together again” in the wake of the coronavirus pandemic.
Trump said he was overseeing “the greatest economy in the history of our country” before the pandemic struck and said he took action to prevent the economic free fall from deepening further.
Carl Sciamotta, chief market strategist at Toronto-based payments company Corpay, said Biden had a “disastrous performance” that led to a sharp increase in Trump’s chances of winning.
“This causes trade-sensitive currencies to fall,” he said.
Both Biden and Trump have taken a tough trade stance, imposing and threatening tariffs on China in particular. But investors are leery of the tariffs’ impact on inflation.
PredictIt’s online prediction market for the 2024 presidential general election showed Biden’s chances dropped to 39% from 45% the day before, while Trump’s chances rose to 61% from 55%.
U.S. Treasury yields rose slightly, with the 10-year yield up 2 basis points to 4.313% and 5 basis points higher for the week, but still below June’s 20 basis points.
JPMorgan analysts noted that Trump’s team has proposed sweeping import tariffs that would raise prices, while immigration curbs would put upward pressure on wages and extended tax cuts would likely increase the national debt.
“Investors are hedging against a further isolationist turn in the United States after the November elections,” Corpay’s Sciamotta said.
Some investors, however, caution against paying too much attention to futures movements in the stock market.
“We are at the very beginning of the journey and we still have a lot to do. Don’t assume the outcome,” said Tim Griskey, senior portfolio strategist at Ingalls & Snyder.