Presidential Debate: Financial Markets Declare Winners and Losers
Investors offered their own grades for Hillary Clinton and Donald Trump following Monday’s debate
By Steven Russolillo
Democratic nominee Hillary Clinton and Republican nominee Donald Trump leave the stage after the first presidential debate on Monday night. Photo: Timothy A. Clary/Agence France-Presse/Getty Image
There was no need to wait for pundits to grade Donald Trump and Hillary Clinton on their Monday debate performances. Financial markets’ judgment was swift.
Currencies, gold and some individual stocks had sharp moves Tuesday that suggested Mrs. Clinton was the victor. After months of conjecture, investors now have a real-world template for what may rise and fall as the election approaches and the candidates’ fortunes shift.
Consider the Mexican peso. It jumped 2% against the U.S. dollar during the debate, a remarkably swift move in currency markets. Mr. Trump has called for scrapping the North American Free Trade Agreement, which would hurt Mexico’s export economy. He also has advocated building a wall along the U.S.-Mexican border. Both could hurt Mexico’s economy and currency.
Then there is gold, considered a haven during market turmoil. Wall Street has long speculated that a Trump presidency might pressure the dollar’s value and raise geopolitical risks, boosting demand for gold. Mr. Trump has also touted the gold standard and the merits of a gold-backed currency. Gold fell more than 1% Tuesday.
And a specific sector, for-profit prisons, drew fresh scrutiny from Mrs. Clinton. “You shouldn’t have a profit motivation to fill prison cells with young Americans,” she said. Her warning comes after the Justice Department last month said it plans to phase out the use of private prisons.
Private-prison companies Corrections Corp. of America CXW -7.39 % and GEO Group Inc. GEO -3.82 % fell 7.4% and 3.8%, respectively, on Tuesday. The risks facing these companies “should be clear,” said Andy Laperriere, a political strategist at research firm Cornerstone Macro.
One sector surprisingly not hit by the debate: biotechnology and pharmaceutical stocks. After singling them out for criticism over drug pricing, Mrs. Clinton didn’t mention the issue in the debate.
Exchange-traded funds for those stocks had been beating the market in recent weeks as Mrs. Clinton’s poll numbers slipped, but they didn’t give up any gains Tuesday.
Portfolios designed to benefit from the election’s outcome are also offering telling signs.
Research firm Strategas Research Partners says its Democratic portfolio has outperformed its Republican portfolio by some 3% this year, implying a 59% probability of a Mrs. Clinton victory.
Not only did investors get to vote early but they will have plenty of recounts before Nov. 8.