2024 presidential candidates Joe Biden and his predecessor Donald Trump faced off in their first debate, with Trump considered to have performed better than his opponent.
Although the election is four months away, investors expect a Trump presidency to mean lower corporate taxes, tighter trade relations and, as a result, higher stock prices and bond yields.
“Wall Street indices have moved higher over the past hour, which could be interpreted as a sign that Mr Trump has been more convincing, because we all know he is Wall Street friendly,” said Matt Simpson, senior market analyst at City Index in Brisbane.
The U.S. dollar hit a 10-day high against the Mexican peso and climbed against other trade-sensitive currencies, including the Canadian dollar.
Stock futures extended their gains as the debate progressed, with the S&P 500 E-minis rising 0.3% and the Nasdaq 100 E-minis rising 0.46%.
China’s benchmark CSI300 index edged up 0.4%, while Hong Kong’s Hang Seng index was flat, as the two U.S. presidential candidates debated tariffs on China, with Mr. Trump criticizing Mr. Biden for not doing more.
Mr. Biden, at times hoarse and hesitant, stumbled over his words several times during the first half-hour of the debate. Mr. Trump launched one attack after another, including on Mr. Biden’s handling of the economy, though fact-checkers deemed many of his comments misleading or false.
Mr Biden acknowledged that inflation had caused prices to rise substantially compared to when he began his term, but said he deserved credit for “getting things back on track” after the coronavirus pandemic.
Mr. Trump claimed he had run “the best economy in the history of our country” before the pandemic and said he had taken steps to prevent the economy’s free fall from getting even worse.
Karl Schamotta, chief strategist at payments firm Corpay in Toronto, said Mr Biden had delivered a “disastrous performance” that had led to a sharp increase in Mr Trump’s chances of winning.
“This translates into a fall in trade-sensitive currencies,” he said.
Both Mr. Biden and Mr. Trump have favored a tough trade stance by imposing and threatening to impose tariffs, on China in particular. But investors are wary of the impact of customs duties on inflation.
Online prediction market PredictIt for the 2024 general presidential election showed that Mr. Biden’s chances had fallen to 39%, from 45% a day earlier, while Mr. Trump’s had fallen from 55% to 61%.
U.S. Treasury yields edged higher, with the 10-year note up 2 basis points to 4.313% and up 5 basis points for the week, but still down 20 basis points for June so far.
JPMorgan analysts noted that Trump’s team had proposed large-scale tariffs on imports, which would drive up prices, while immigration restrictions would put upward pressure on wages and that extended tax cuts would likely increase the public debt.
“Investors are hedging against a more isolationist turn in the United States after the November election,” said Mr. Schamotta of Corpay.
Some investors, however, have warned against reading too much into the performance of stock market futures.
“We’re early in this and there’s still a long way to go. Don’t make assumptions about the outcome,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder. (Reporting by Saqib Iqbal Ahmed, Sinéad Carew, Carolina Mandl and Chuck Mikolajczak in New York, Ankur Banerjee in Singapore and Wayne Cole in Sydney; Writing by Vidya Ranganathan and Jamie Freed)
