The US election scenes are seeing dramatic twists and turns, the latest being the betting odds posting a significant 4 percent jump in favour of Donald Trump at 51 percent, over 47 percent for Kamala Harris, in the week ended on Monday, September 2, over the previous week, keeping the markets on tenterhooks, as real politic overtakes the euphoria over the Democratic Party’s convention.
The latest opinion polls, however, gave only a shade higher rating – 0.1 percent – to 43.8 percent to the former president and Republican candidate, as against 47.1 percent for the Democratic presidential candidate – down by 0.1 percent from last week – but still giving Harris a 3.3 percent edge over Trump.
US S&P 500 Index closed nearly 120 points – or 2.12 percent – down at 5,528.93 on Tuesday, September 3, after posting a record-high weekly closing last week when the betting market was giving higher odds for a Trump victory in the November 5 election.
US markets were closed on Monday, September 2, on account of Labour Day.
Political observers and market experts said the polls are mean reverting after the Harris surge.
“Polls have tightened a bit again, and thus back in Trump’s favour as we can see from the shift in the polling and betting odds,” John Hardy, Chief Macro Strategist at Saxo Bank, said.
“Stock markets saw a continued recovery in sentiment after the brief wipeout in early August [in the run-up to the Democratic Party convention],” he said.
Hardy said with polls in closer balance, it is impossible to associate moves in specific assets with the anticipated election outcome, but the underlying direction of the economy is critical to track as we head toward November 5.
He also pointed out that a weak economy is historically associated with voters rejecting the party in power.
After the quick emergence of Vice President Harris as the Democratic nominee after President Biden stepped aside on July 21, her polling averages surged nearly every week through the convention the week before last.
Post-convention, the polls seem to mean reverting back to closer balance.
Trump scores higher in battleground states
Reports said Trump has taken a stronger lead in betting markets and some battleground – or “swing states” – with the latest polls suggesting the race is extremely tight.
A poll in Michigan, a “swing state”, showed Trump with a 1 percent lead, though pollsters acknowledge that the results could have a 4 percent polling margin of error.
Michigan is among the crucial battleground states the Harris campaign is focusing hard to retain – President Joe Biden won Michigan by nearly 3 percent in 2020.
Political observers said the forthcoming face-off between Harris and Trump in their first debate on September 10 on ABC News will be crucial for both campaigns as it would be a deciding factor which way the wind could blow.
Biden had to bow out of the presidential race as a fallout of his lacklustre performance at the first debate with Trump.
The next US labour market report, to be released on September 10, will be another major economic data point political observers see as influencing the mood among voters, especially the unregistered and undecided young voters.
The US unemployment rate, which was at 4.3 percent in July, is expected to have dropped to 4.2 percent in August.
The US Federal Reserve has recently highlighted its concern about the labour market and a weak report – meaning a higher unemployment rate – is widely speculated to force its hands to a larger 0.50 percent interest rate cut.
“The campaigns will go full tilt from here until election day on the 5th of November,” Saxo Bank’s Hardy said.
Harris or Trump: Middle East observers keep fingers crossed
Political observers and policy experts said the 2024 US presidential election presents a critical moment for the Middle East, especially for countries like the UAE and Saudi Arabia, which have deep ties to the US, and are closely watching the potential outcomes of a Harris or Trump presidency.
They said if Kamala Harris were to win the presidency, her administration might bring a more diplomatic and multilateral approach to the region, while a Trump presidency would likely see a return to his previous policies, which would be marked by strong personal diplomacy and a focus on transactional relationships.
“Donald Trump is likely to push for further normalisation of relations between Israel and GCC states, particularly Saudi Arabia.
“This could increase trade and investment opportunities, especially in the technology, defence, and energy sectors,” Dr Kiran Nair, an expert on economic policy and Associate Professor at Abu Dhabi University (ADU), told Arabian Business.
Dr Nair said the policies of a possible Trump administration in Washington are expected to drive up global oil prices due to increased demand from the US, and potentially slower progress on renewable energy.
“This would benefit Middle Eastern oil producers like Saudi Arabia and the UAE, potentially leading to higher revenues and positively impacting their economies,” he said.
On the other hand, Dr Nair said, Harris is expected to maintain strong economic ties with Middle Eastern allies, mainly through multilateral engagements and a focus on regional stability.
“Harris’ commitment to environmental issues might accelerate investments in renewable energy projects in the Middle East, particularly in the UAE and Saudi Arabia, which are already pursuing ambitious green energy agendas.
“This could open new avenues for trade and investment in sustainable technologies,” the ADU academic said.
He said Harris’ policies may support a more stable oil market with moderate price fluctuations.
“Her administration’s push for a green transition might reduce the long-term reliance on fossil fuels, but the market is expected to remain steady in the short term,” Dr Nair said.
Political observers said Trump’s approach could also bring volatility, particularly if his administration decides to escalate military actions or sanctions in the region, which could be a potential drawback for the UAE and Saudi Arabia.
They said while a Trump presidency might offer short-term gains regarding security and economic deals for the UAE and Saudi Arabia, a Harris presidency could provide a more stable and balanced long-term relationship focusing on sustainable development and human rights.
“Both outcomes have their advantages, but the key difference lies in the approach – transactional versus diplomatic – and the potential impact on the broader geopolitical landscape of the Middle East,” Dr Nair said.
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