NEW YORK The U.S.Former President Donald Trump’s entry on Tuesday into the 2024 presidential race confirmed the world’s “worst kept secret” and created another variable for markets that some investors say remains a low priority for now.
Trump, who has mounted relentless attacks on the integrity of U.S. voting since his 2020 election defeat, announced his bid at his Mar-a-Lago estate in Florida, seemingly with the aim of preempting potential Republican rivals.
His high-spirited televised announcement comes after a disappointing showing in last week’s midterm congressional elections that many Republicans blame on him and as the party closes in on a majority in the 435-seat House of Representatives.
Related: A US court rejects Trump’s challenge to his Twitter ban.
Joshua Crabb, head of Asia-Pacific equities at investment manager Robeco, said: “I don’t think the announcement means as much as people thought it would, and with a weaker showing at the mid-terms, it reduces the likelihood of nomination.”
If he receives a strong nod, “the impact won’t be felt until later.”
This year, macroeconomic concerns and Federal Reserve policy have been the main market drivers, with politics largely taking a backseat.
Investors, meanwhile, were not overly surprised by Trump’s announcement because the former president had long hinted that he might run for office again.
Bill Stone, the chief investment officer of the Glenview Trust Company, declared that this must be the worst-kept secret on earth. Even though something can easily change overnight, there are many other things going on that are of higher priority.
Of course, it’s challenging to foresee the type of investing environment the nation’s future president will encounter.
It is likely that it won’t look much like the current one or the one that existed prior to President Trump’s term, which lasted from 2017 to 2021 and was distinguished by comparably low inflation and a significantly less hawkish Fed.
Anthony Scaramucci, a former director of communications in the Trump White House and the founder of Skybridge Capital, said on the sidelines of a conference in Singapore that the president is “the Holy Trinity of market lubrication”—stimulus through deficit spending, low interest rates, or “easy money,” and a lack of regulations.
On the other hand, investors are aware that he fosters political instability, which the markets despise above all else.
WE HURT BECAUSE WE’RE SEPARATED
Contrary to Trump’s last campaign, some investors were concerned about the division within the Republican Party.
“If anything, his decision to run may aggravate the divides going on among Republicans, with many blaming him for their poor midterm election showing,” says Shane Oliver, head of investment strategy at AMP in Sydney.Some investors may even view these splits as a negative for the markets since they may reduce the likelihood that a more pro-market Republican administration will win the presidency in 2024.
Despite volatile flashpoints like the trade war with China and the severe but brief economic slowdown that accompanied the COVID-19 pandemic, the U.S. stock market increased by more than 50% between Trump’s unexpected victory in the 2016 election and his fall in November 2020.
Related: The United States has reduced tariffs imposed by President Donald Trump on Japanese steel.
The Republican president, who frequently tweets about Wall Street’s performance, has taken credit for the increase.
The S&P 500 is down almost 16% for the year as of Tuesday, despite a recent surge, following the Federal Reserve’s delivery of a series of sizable rate increases in an effort to combat inflation.
In order to assess the future of the former president, investors are also keeping an eye on the stocks associated with him.
On Tuesday, shares of Digital World Acquisition Corp., a company with a blank check that is trying to go public with Donald Trump’s social media project, dropped 8.8%, while those of Phunware Inc., a company that was hired by Trump’s 2020 re-election campaign to develop a mobile app, saw a 4.7% decline.
On reports that Trump was considering a third bid for the White House, both stocks increased earlier this month.
