Investors are preparing for continued market volatility following the announcement US President Joe Biden is ending his re-election bid and has endorsed Vice President Kamala Harris as his replacement.
“This has thrown a new variable into the 2024 election equation, putting markets on edge,” deVere CEO Nigel Green commented.
The primary question looming over investors is whether or not to continue betting on the Trump Trade, Green said.
The Trump Trade refers to the market behaviours and trends which emerged during Republican candidate Donald Trump’s presidency related to his administration’s looser fiscal policies, deregulation, higher tariffs, and infrastructure spending.
“The impact of these policies on the markets included a rising dollar, higher bond yields, specific sectors like banking, healthcare, energy, and industrials seeing gains due to deregulation and anticipated infrastructure projects, and Bitcoin seeing increased interest,” Green said.
“If Harris can gain significant traction and pose a credible threat to Trump’s lead in the polls, market volatility is expected to persist.”
Swissquote bank senior analyst Ipek Ozkardeskaya added: “The Trump trade could lose some steam but will probably not get reversed if Harris doesn't make a material difference in the polls quickly.”
The 'Harris Trade’
It’s too early to tell if the “Harris Trade” will boost US stocks, XTB research director Kathleen Brooks said.
“The Democrats have reigned over strong US economic growth and record highs for US stocks, particularly the tech giants,” she wrote.
“However, Joe Biden’s policies have also pushed up the US deficit, something that may eventually weigh on the US economic outlook.”
Harris being confirmed as the Democratic nominee could dampen the demand for oil stocks due to her tough stance on oil and being anti-shale and fracking, Brooks added.
In the early afternoon on Monday, the Nasdaq added 1% at 17,898 points, the S&P 500 was up 0.6% at 5,538 points, and the Dow Jones was flat at 40,301 points.