{"id":132362,"date":"2024-09-11T14:41:09","date_gmt":"2024-09-11T14:41:09","guid":{"rendered":"https:\/\/news.talkwithrattan.com\/index.php\/2024\/09\/11\/why-traders-are-dialing-back-bets-on-donald-trump-times-of-india\/"},"modified":"2024-09-11T14:41:09","modified_gmt":"2024-09-11T14:41:09","slug":"why-traders-are-dialing-back-bets-on-donald-trump-times-of-india","status":"publish","type":"post","link":"https:\/\/news.talkwithrattan.com\/index.php\/2024\/09\/11\/why-traders-are-dialing-back-bets-on-donald-trump-times-of-india\/","title":{"rendered":"Why traders are dialing back bets on Donald Trump – Times of India"},"content":{"rendered":"
\"Why<\/div>\n
Traders are further unwinding bets linked to Donald Trump<\/a> winning the White House after he suffered what many pundits called a clear defeat in last night\u2019s crucial debate with rival Kamala Harris<\/a>.
Trump Media & Technology Group Corp shares tumbled 14% and Bitcoin, an asset that\u2019s been embraced by the former president, retreated slightly. A Bloomberg gauge of the dollar fell as much as 0.3% before recovering.A strong dollar has become somewhat associated with Trump given his plan to penalize countries moving away from the currency.
Meanwhile, green energy shares gained on speculation that Democrats would bring more funding for the transition to renewables, with the Invesco Solar ETF adding about 3%.
While the moves in a handful of assets deemed likely to benefit from a Trump win offer a signal that positioning is tilting in favor of Harris, strategists warned against reading too much into the price action. The race remains very close and some of the moves could be explained by shifts in the outlook for the US economy.
\u201cMarkets seem to have awarded Harris a victory,\u201d wrote Francesco Pesole, a currency strategist at ING Bank. \u201cIn FX, a Trump win is associated with a stronger dollar, which is trading on the soft side across the board.\u201d
The odds of the Democratic party candidate winning the election increased on the betting website PredictIt to 56%, compared with 53% before the debate. Wall Street has been adjusting its election bets for the past few weeks, tracking Vice President Harris\u2019 rise in the polls.
One factor complicating any market interpretation of the debate was the report on US consumer prices also landing on Wednesday. With the Federal Reserve widely expected to cut interest rates next week, some strategists said the impact of monetary policy should outweigh any speculation on US politics.
What Bloomberg\u2019s strategists say:
\u201cThe main markets takeaway from all the political analysis is that it would be financial folly to have conviction on who will win this election that\u2019s still eight weeks away. Never mind worrying how you actually profit from knowing that answer, given the lack of clarity over what policy each candidate would be able to implement quickly, and the debate over how assets would subsequently react.\u201d
\u2014 Mark Cudmore, MLIV executive editor in Singapore
Shares of Trump Media, which operates Truth Social and counts the presidential candidate as its top shareholder, have at times traded as a proxy for Trump\u2019s election odds, rising sharply after an assassination attempt in July, when there was a sharp rise in betting-market odds of him winning a second term. Other times, it\u2019s traded like a volatile meme stock, swinging wildly on little to no news or fundamental changes to its underlying business.
The company is also facing the expiration of a lockup period, which could take place as soon as Sept. 19 and enable insiders \u2014 including Trump himself \u2014 to start selling shares.
At Citigroup Inc, strategists pointed to dollar weakness as an indication that Harris bested Trump in the debate, but added that the currency will stay strong heading into November given that tariffs remain a central plank of Trump\u2019s economic platform.
\u201cWe still expect the election will remain close enough in the coming weeks that markets will maintain some premium for Trump policies,\u201d wrote strategists including Daniel Tobon at Citigroup. \u201cIt remains to be seen if voters agree with betting and financial markets.\u201d
Jefferies International\u2019s Mohit Kumar echoed the caution around trades tied to a specific candidate and said the debate didn\u2019t produce a clear winner. Even so, he said Harris did better than expected and her policies would likely focus less on tax cuts and fiscal expansion than Trump.
In the view of Saxo Bank, it\u2019s still a challenge to price in a Harris trade, especially because the Democrats will likely face a split Congress.
\u201cHarris\u2019 rising prominence could have notable effects across various sectors,\u201d wrote Charu Chanana, global market strategist at Saxo. \u201cMany of the other \u2018Trump Trades\u2019 such as a weaker Chinese yuan or traction in defense stocks could take a backseat.\u201d <\/div>\n