Trump-Linked Equities Rallied. Investors Brace for Former President's Possible Return
Following Florida Governor Ron DeSantis' recent announcement that he will not be seeking the presidency in 2024, former President Donald Trump's prolonged momentum during the primary season boosted a significant spike in Trump-related equities.
Software developer $Phunware(PHUN.US$, which was hired by Trump's 2020 presidential re-election campaign to build a phone app, ended 41.55% higher. The company has rallied over 300% in the past five trading sessions.
Shares of $Digital World Acquisition Corp(DWAC.US$, the blank check firm set to take the social media platform public, rocketed 88.36% to their highest in 19 months. The trading volume of the stock reached 29.65 million on Monday, almost
$Rumble(RUM.US$, a conservative alternative to Google's YouTube, jumped 36.21%, after announcing a partnership with Barstool Sports along with the DeSantis news.
"I'm excited about Rumble's commitment to sports and broadening audiences," Dave Portnoy, Founder of Barstool Sports said in the statement. "With the power of Barstool Sports, we are going to help Rumble be the top player in the video, cloud, and livestreaming space."
Artificial intelligence solutions company $Remark Holdings(MARK.US$, which has been linked to the former president on social media sites per Reuters, surged 36.21% on Monday.
According to Bloomberg's Bailey Lipschultz, The latest spike of Digital World Acquisition came as investors flipped out-of-the-money call options, a favorite strategy of retail traders and driver of many previous meme stock rallies. Options for the stock to trade above $55 — a level it hasn’t topped since April 2022 — were the most active. The ticker saw an increase in mentions on Reddit’s WallStreetBets and trader chatroom StockTwits in recent days.
Some investors have already been starting to point to heightened odds of a Trump presidency as a reason behind recent "Trump Trade" optimism.
Investors may be flocking to the "Trump Trade," said Zhiwei Ren, a portfolio manager at Penn Mutual Asset Management, shared with Wall Street Journal's Gunjan Banerji that Trump's well-known stance on reducing regulation and maintaining low-interest rates might be propelling small-cap stocks upward.
During his tenure, Trump openly advocated for reduced regulatory burdens and was a proponent of low-interest rate policies, Ren noted. Trump consistently challenged Federal Reserve Chairman Jerome Powell on monetary policy, urging for rate reductions or to keep them at minimal levels. Such preferences are believed to favor the $Russell 2000 Index(.RUT.US$, as the performance of smaller companies within it is often more affected by fluctuations in interest rates.
Markets now eye the New Hampshire primary on Tuesday, where Donald Trump faces Republican challenger Nikki Haley, as the recent sentiment-driven stock movements are largely hinging on upcoming political events.
Source: Reuters, WSJ
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