Infotech

US presidential election: how Donald Trump’s tweets moved Wall Street



Posted on Nov 2, 2020 at 10:40 a.m.Updated Nov 2, 2020, 3:03 PM

“The Dow Jones has just crossed 29,000 points. You are lucky to have me as your chair. With Joe “Hiden” [Joe le « caché », NDLR] he would collapse “. Donald Trump’s last message on the American Stock Exchange on Twitter, dated September 2, reflects his communication with the markets: triumphant and uninhibited.

The American president proclaims himself primarily responsible for the rise of Wall Street, its records and the good health of its companies. On the social network, he delivered simple and shocking messages to create media “buzz” and capture the attention of the markets.

Self-promotion

Of the 54,746 messages on Twitter or “tweets” sent to his 87.3 million subscribers (less than one in 4 Americans), Donald Trump has devoted many to American groups and to Wall Street. The frequency of its tweets on US stocks tends to increase, especially during periods of rising markets. This was the case in 2019, an excellent year for the American and global financial centers.

Under his presidency, his 26 posts on Nasdaq, the US technology market, all underscored his records. And he never misses the opportunity to compare his stock market record to that of his predecessors.

Trade war

It is before the opening of the American stock markets, between 6 a.m. and 9 a.m. that Donald Trump sends the most messages. The days when he mentions the tariffs and the trade war with China coincide with sessions of decline on Wall Street, on average 0.1% but sometimes up to -1% according to the magazine “Barron’s”. This was the case when it announced in August 2019 its intention to apply additional tariffs to Chinese imports.

When he criticizes the Federal Reserve and its Governor Jerome Powell, US stocks barely fall (-0.05%). The markets know that the central bank is independent and that the US president can only separate from his governor in the event of serious misconduct.

Whatever the content of presidential tweets (economics, politics, etc.), their number is inversely correlated with the performance of Wall Street: the more Donald Trump tweets, the more likely American stocks are to fall according to Bank of America-Merrill Lynch.

Targeted companies

When the president designates a listed company, as he did with Ford, United Technologies, Boeing, American Airlines, Harley-Davidson, ExxonMobil, Bayer AG, Toyota, Fiat Chrysler…, for good or for bad, its price is influenced for two to three sessions. If the tweet is positive it gains 1.4% on the day and if it is negative it loses 1.05%, according to research.

When he speaks of a listed company, it is in two out of three cases to criticize it rather than to praise it. The first company to fall victim to the presidential wrath was Lockheed Martin, criticized three days before Christmas, on December 22, 2016, for its costs and prices that were too high. Its price fell 2%, a drop of $ 1.2 billion in its market capitalization.

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