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How Does the Stock Market React to the First US Presidential Debate? - US Market Open

How Does the Stock Market React to the First US Presidential Debate? - US Market Open

2020-09-29 12:30:00
Justin McQueen, Analyst
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S&P 500, US Presidential Debate Analysis & News

  • Is the First Presidential Debate a Market Mover?
  • Stock Market Reaction to First Presidential Debate
  • How Did Markets React to 2016 Presidential Debates

Is the First Presidential Debate a Market Mover?

In the early hours of the morning (at 0200BST if you are based in the UK) market focus will be on the first Presidential debate between Donald Trump and Joe Biden. As it stands, the national polling average points to a rather comfortable lead of 6.4ppts for Joe Biden. However, those without short memories will remember quite clearly how far the polls were in favour of Hilary Clinton over Donald Trump in 2016.

That said, the main question in the short-term will be as to whether the presidential debate will be a market mover. Thankfully, LPL Research shows clearly how presidential debates have impacted the stock market and judging by history, it suggests that the presidential debate had a rather minimal impact. Although, one caveat to add is that this can also depend on whether there is an obvious political gaffe from either candidate.

Stock Market Reaction to First Presidential Debate

US 500 MIXED
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 2% 2% 2%
Weekly 7% -1% 2%
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How Does the Stock Market React to the First US Presidential Debate? - US Market Open

How Did Markets React to 2016 Presidential Debates

Taking a closer look into the 2016 presidential debates, it had been judged that Hilary Clinton had won all three debates against Trump. However, given the election outcome, it goes to show that the debates are not the be-all and end-all. Alongside this, the reaction in risk appetite to the debates in 2016 saw little in the way of notable movements in risk appetite. Although one point to note is that this debate will take place ahead of month-end rebalancing, which has been touted to be equity positive according to various investment bank models given the underperformance in equities this month. (What is the month-end impact on FX)

How Does the Stock Market React to the First US Presidential Debate? - US Market Open

Source: Refinitiv

First Presidential Debate Format

The presidential debate will be in the format of six questions across six segments. This areas will involve:

  • Biden’s and Trump’s records
  • The Supreme Court
  • Coronavirus Pandemic
  • The Economy
  • Racial protests and violence
  • Integrity of the election

Market Outlook Ahead of the First Biden-Trump Presidential Debate

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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