US president Joe Biden withdrew from the presidential election on Sunday, endorsing vice president Kamala Harris as the likely Democrat candidate, with betting offices seeing a 92% probability of her nomination. Meanwhile, Trump's chances of winning the presidential election stand at 61%. Harris faces a long road ahead.
Support and challenges for Kamala Harris
Following Biden's withdrawal, Harris quickly gained support from prominent party members, including Bill and Hillary Clinton, and Democratic leaders in Congress Chuck Schumer and Hakeem Jeffries. Her campaign also raised $81m, dispelling doubts about the Democrats' financial clout. However, markets remain sceptical about Harris's chances against Trump. The next TV debate is on 10 September.
The "Trump trade" and its market impact
If Harris gains popularity in the polls, the "Trump trade" could lose its appeal, potentially putting pressure on small US companies, oil and gas producers, gold, and Dow Jones stocks but possibly easing volatility in US bond markets.
Stock markets currently face pressure due to a seasonally weak phase and a turbulent election campaign, resulting in increased volatility. Investors also speculate that the US Federal Reserve could cut interest rates in September, which could temporarily overshadow the election campaign.
Important decisions ahead at the Democratic National Convention
The Democrats' final nomination will be decided at their convention in Chicago from 19-22 August. Harris's first online confirmation could occur between 1-7 August, but the nomination could be brought forward.
Outlook: Harris vs Trump?
Previous polls showed Trump leading due to Harris's low approval ratings. However, a new Reuters/Ipsos poll shows Harris ahead of Trump, 44% to 42%. It's worth noting that earlier polls often overrepresented Democratic voters, and other polls still indicate a higher chance of a Trump victory.
The current stock market uptrend is mainly driven by strong corporate earnings, especially in the S&P 500, which is having its highest earnings growth in years. However, even with good results, stocks like Alphabet can fall as high investor expectations lead to profit-taking.
Conclusion: Uncertain times before the elections
The coming months will be interesting as the Democratic Party faces critical decisions about its future and that of the country. Harris's success hinges on gaining voter trust and proving herself as a strong leader.
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