Trump Trades are further withdrawn after the US debate

(Bloomberg) — Traders are abandoning bets on Donald Trump winning the White House after he suffered what many pundits called a clear defeat in last night’s crucial debate with rival Kamala Harris.

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Shares of Trump Media & Technology Group Corp. (DJT, DJTWW) fell 14%, and Bitcoin (BTC-USD), an asset that was embraced by the former president, fell slightly. A Bloomberg gauge of the dollar fell as much as 0.3 percent before recovering. A strong dollar has become somewhat associated with Trump given his plan to penalize countries that move away from the currency.

Meanwhile, green energy stocks gained on speculation that Democrats would push for more funding for the renewable transition, with the Invesco Solar ETF adding about 3 percent.

While moves in a handful of assets seen as likely to benefit from a Trump victory provide a signal that positioning is tilting in favor of Harris, strategists cautioned against reading too much into the price action. The race remains very tight and some of the moves could be explained by changes in the outlook for the US economy.

“Markets seem to have given Harris a win,” wrote Francesco Pesole, a currency strategist at ING Bank. “In FX, a Trump win is associated with a stronger dollar, which is generally trading on the soft side.”

The odds of the Democratic Party candidate winning the election have increased on betting site PredictIt to 56%, compared to 53% before the debate. Wall Street has adjusted its election bets in recent weeks as Vice President Harris surged in the polls.

Complicating any market interpretation of the debate was the US consumer price report that also landed on Wednesday. With the Federal Reserve expected to cut interest rates next week, some strategists said the impact of monetary policy should outweigh any speculation on US policy.

What Bloomberg strategists say:

“The main market takeaway from all the political analysis is that it would be financial folly to be confident about who is going to win this election eight weeks away. It doesn’t matter how you actually benefit from knowing that answer, given the lack of clarity on what policy each candidate might quickly implement and the debate over how assets would react afterward.”

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— Mark Cudmore, MLIV Singapore Executive Editor

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Shares of Trump Media, which operates Truth Social and counts the presidential candidate as its largest shareholder, have sometimes traded as a proxy for Trump’s electoral chances, rising sharply after an assassination attempt in July when a surge sudden change in the betting market. the chances of him winning a second term. Other times, it trades like a volatile meme stock, swinging wildly on little or no news or fundamental changes to its core business.

The company also faces the expiration of a lock-up period that could happen as soon as September 19 and allow insiders — including Trump himself — to start selling shares.

Trump Media shares post-debate slide as lockout expiration looms

At Citigroup Inc., strategists said the dollar’s weakness was a sign Harris beat Trump in the debate, but added the currency would remain strong through November as tariffs remain a central element of Trump’s economic platform .

“We still expect the election to remain close enough in the coming weeks that markets will maintain some premium for Trump policies,” strategists including Citigroup’s Daniel Tobon wrote. “It remains to be seen whether voters are okay with betting and financial markets.”

Jefferies International’s Mohit Kumar echoed caution around candidate-related deals and said the debate had not produced a clear winner. Even so, he said Harris has done better than expected and that her policies will likely focus less on tax cuts and fiscal expansion than Trump’s.

In Saxo Bank’s view, it’s still a challenge to price a Harris deal, especially since Democrats will likely face a divided Congress.

“Harris’ rising prominence could have notable effects across sectors,” wrote Charu Chanana, global market strategist at Saxo. “Many of the other ‘Trump Trades’, such as a weaker Chinese yuan or traction in defense stocks, could be shelved.”

(Updates market prices throughout.)

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