Trump vs Biden Debate In Focus

When?
Tuesday September 29th  9pm – 10:30pm ET

Where?
The event is to take place at Case Western Reserve University in Cleaveland.

Format?
Fox News anchor Chris Wallace will moderate the debates 
The debate will run 90 minutes and will be divided into 6 sections of 15 minutes each. 

Oddschecker forecasts for first debate win

Joe Bidden 4/11
Donald Trump 2/1 
Donald Trump has accounted for 65% of bets placed this week on the first debate, Joe Bidden just 35%.  

Will Americans be watching?
The Trump vs Clinton debate drew a record 84 million. Given that the neither candidate has been as highly visible as they have been in other years due to covid restrictions on campaigning and given theie diverging policies there is a good chance that this debate will be seen as a good window for further insight.

Continuing on this line of thought, we have seen very little of Joe Bidden compared to Trump’s almost daily appearances, comments or twitter rants. The market knows what to expect from Trump, slip ups and all, whilst any slip up from Joe Bidden could quickly be a sticking point.

Does the debate matter?
Even if American’s tune in the debate historically doesn’t alter voting preferences, with the candidate leading heading into the debate winning to race to the White House. However, 2020 is far from a standard year and given their lack of visibility so far that could change.

Historically the debate isn’t a big market moving event. However, given the backdrop of coronavirus and a record braking contraction in Q2, the public could be more easily swayed that in other years and investors could be twitchier that usual meaning high levels of volatility are possible.

Where the polls stand heading into the debate
The latest polls put Joe Biden in from of Trump with a 6.7% lead. Bidden is also seen with a slight lead in several key states. Biden has a 60% probability of wining. Should anything in the debate give greater view on that then it could potentially be market moving.

How could the financial market react?
It’s still early days but so far the markets haven’t paid much attention to the Trump Bidden race. Instead more immediate factors such as covid and a US stimulus package have been bigger drivers. That said, the first debate could bring the elections to the foreground for the first time prompting more of a reaction.

It is not the substance per se of what each candidate will be saying which could drive the market’s reaction. It could be argued that the markets are more likely to react to which candidate is perceived to have won. This means that rather than big swings though the debate, a more notable reaction could come with the post-debate polling numbers. 

Markets to watch
Broadly speaking markets are uneasy about Biden's tax policy. Biden has said that he wants to raise corporate taxes from 21% to 28%. He is also in favour of raising taxes on the rich to just shy of 40% from 23.8%. Biden also supports increasing regulation. These are not business friendly policies for corporate America. 

However, Biden also has a softer stance on China so stocks related to global trade could advance. International stocks could far better under Biden, so stocks with large foreign revenues or exposure to China could fare well, tech stock. Biden is also big on renewable energy so that could be another sector to focus on.

Meanwhile a strong performance by Trump is broadly considered market friendly, equities will broadly be expected to rally. Within sectors, Trump winners would be defence, energy, oil, for profit educations.

USD
As far as the US Dollar is concerned, investors will be listening carefully to comments surrounding the economy for further clues. Broadly speaking analysts consider a Biden win could weaken the US Dollar. Higher taxes, easing tensions with China and a tamer Wall Street could all weigh on demand for the greenback. However, the fact is there are a lot of unknowns.

Right now, if the debate provides any further certainty on who might win, that could take the edge off the market and drag on the US Dollar’s safe haven properties.

S&P 500 Chart