A combined 51.27 million total viewers watched the CNN Presidential Debate on television last night. Among adults 25-54, 13.8 million tuned in. Additionally, there were more than 30 million live starts of the debate on CNN’s digital platforms and on YouTube, and this was the biggest day for CNN on MAX – nearly doubling the previous record.
CNN said imore people watched the CNN Presidential Debate than any other CNN program in history. The Debate was also the most watched non-sports program of the year so far among both P2+ and P25-54 on television.
However, while Americans seemed excited for the election season, markets will also be busy focusing on four political events in the coming week.
Standard Chartereed in its review said the first Biden-Trump debate before the US presidential elections in November kicked off a packed political season. President Biden’s performance reinforced concerns about his age, likely giving Trump an early edge in the campaign.
France’s two-round elections can potentially cause market volatility, especially if the far-right National Rally wins a majority, since markets are expecting a hung parliament. We believe any pullback would offer a chance to add to European government bonds. Iran is likely to elect a president aligned with the ruling authorities, sustaining Middle East tensions. The UK elections are probably the least interesting for markets given the Labour party’s sizeable lead in the opinion polls, although how Labour plans to fund its campaign promises remains unclear.
Standard Chartered in its economic belives a diversified foundation asset allocation, with a tilt towards US equities globally, a preference for Indian equities in Asia, and an allocation to gold as a hedge against political uncertainty, is a prudent strategy in the coming months.
Trump vs. Biden debate: Apart from the well-known issues (inflation, immigration, China/trade tariffs, abortion rights, Trump tax cuts/fiscal sustainability and the wars in Ukraine and Gaza), the focus was on the physical abilities of the two oldest major contestants to ever fight a US election. Former President Trump appeared to have come out on top after the debate as President Biden wavered at times. While the race remains tight, history suggests Biden has an edge if the US avoids a recession before the elections. However, Biden’s chances of re-election are likely to wane if he fails to lift US consumer confidence soon. Over the past 50 years, except in 2012 (when Obama was re-elected), no incumbent US party has won a re-election if the Conference Board consumer confidence index was below 100 in July (the index stood at 100.4 in June).
France’s elections have implications for EU fiscal policy. The consensus is for a hung parliament which would disrupt President Macron’s economic agenda. A victory for the far-right National Rally (or a coalition led by the party) is likely to trigger talks to ease EU fiscal policy rules. Nevertheless, Italian Prime Minister Meloni’s precedent of a far-right candidate heading a major European government for the first time since WWII suggests markets are excessively pricing EU political risks even if a far-right coalition government is formed in Paris.
Investment implications: We maintain a tilt towards US equities in our diversified global asset allocation. US PMI data for June surprised positively, while Euro area PMIs underwhelmed. Besides, US equities continue to be powered by improving earnings expectations, especially in the technology and communications services sectors, with market leadership broadening out. Quantitative and technical models remain supportive of US equities.
The house continues to prefer European government bonds (FX-hedged), especially after the dip due to French election risks. Barring an upset forcing President Macron to resign, the elections are unlikely to alter EU fiscal rules. Meanwhile, weak Euro area PMI data point to more ECB rate cuts in H2. This would be positive for Euro area government bonds.
In Asia, India remains our preferred equity and bond market. India’s political uncertainty has waned with the formation of the new government, ensuring policy continuity. In the upcoming budget (likely in the third week of July), we expect the government to boost rural consumption, infrastructure and green energy. The fiscal boost is likely to sustain India’s corporate earnings growth and Return on Equity advantage vs other EMs. Standard Charteres said it also finds Indian government bonds attractive due to high real rates. The inclusion of Indian government bonds in a major global bond index, with a 10% weight, is a key milestone for the bond market.
