Republican debate: Trump conspicuous by his absence for markets

Despite former President Donald Trump, who has a significant lead in national and early state polls, skipping the third Republican primary debate, the prospect of him securing victory over incumbent President Joe Biden is capturing the attention of investors worldwide.

Five candidates took the stage: former New Jersey Gov. Chris Christie, Florida Gov. Ron DeSantis, former U.N. Ambassador Nikki Haley, entrepreneur Vivek Ramaswamy, and South Carolina Sen. Tim Scott.

Missing was front-runner Donald Trump, who instead hosted an evet not far away, in Hialeah, Florida.

Global financial markets, always focused on the intersection of politics and economics, is poised for a “dynamic response” should Trump return to the Oval Office, says Nigel Green, the CEO of deVere Group, one of the world’s largest independent financial advisory, asset management and fintech organizations.

He comments: “Whether you support him or not, there are both positives and negatives of a Trump re-run for markets.”

One of the key factors driving market sentiment is the legacy of Trump’s previous term.

His administration, characterized by pro-business policies, such as tax cuts and deregulation, created a bullish market environment.

“Investors responded favorably to initiatives aimed at stimulating economic growth, and a return to Trump’s presidency could reignite optimism, particularly in sectors sensitive to regulatory changes,” asserts the deVere Group CEO.

However, the road ahead is not without its challenges. Trump’s past inclination towards trade wars, notably with China, injected volatility and uncertainty into global markets.

“A second Trump term could reignite concerns about protectionist measures, trade tensions, and geopolitical instability. Investors would likely find themselves recalibrating risk exposures as the spectre of renewed tariff battles looms large on the horizon.”

He continues: “The unpredictability associated with Trump’s governance style is another factor that may impact market dynamics. His ‘America First’ policy, marked by unilateral decision-making, challenged established norms of multilateral cooperation.

“The potential resurgence of this approach also raises questions about the future of international relations and could introduce geopolitical tensions, prompting market participants to re-evaluate their risk strategies.”

Domestically, his administration’s business-friendly policies are expected to receive a favorable reception in certain sectors, concerns about social and political stability could temper market enthusiasm.

“No question that Trump’s polarizing rhetoric and divisive governance style could exacerbate domestic tensions, with potential consequences for market sentiment,” says Nigel Green.

The Federal Reserve could also be expected to recalibrate its monetary policy in response to changes in the political landscape.

The deVere CEO explains: “If a Trump victory is expected to lead to a considerable increase in economic activity and inflationary pressures, the Fed could consider gradually raising interest rates again to prevent overheating and excessive inflation.”

He concludes: “Trump was, again, conspicuous by his absence at the debate.

“For investors around the world, while he was out of sight on that stage, he was certainly not out of mind. Far from it.”