It’s not unusual for political statements to influence markets. For a long time, analysts and traders alike have scrutinized what the President of the United States might mean with each remark or turn of phrase he makes.
After all, the policy from the White House can have a major impact on the economy.
These very White House policies are usually communicated via formal statements. And, these statements usually undergo a thorough reviewing process to ensure they reflect the standing policy of the Administration.
What is unusual with this President is that these policies are communicated via personal Tweets, unvarnished, and condensed.
Not only are Trump’s Tweets not reviewed by policy wonks, but they also aren’t even proof-read.
Try as they might, the President’s advisers haven’t been able to wrestle away his personal Twitter account. And, the President has continued to cling to it as a way to communicate directly with his supporters.
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Trump is often awake long before the markets open. Typically, he’s up as early as 5:00 AM EST giving his views on, well, everything.
Often, those views can have a major impact on the markets and on individual stocks. So much so that it’s an established routine in trading institutions to check Trump’s personal Twitter account at the start of the day. Traders also monitor it during trading hours to stay on top of updates.
Bloomberg has even set up a website tracking all of Trump’s market-related tweets, tied to the performance of the DJIA.
So, What Tweets Have Had the Most Impact?
1 – The Trade War is Back On
In late July 2019, it appeared that the US and China were on the cusp of reaching an agreement on ending their tariff war. Then Trump tweeted:
Click Tweet to see full thread.
The S&P500 fell 0.9% consequently. It was the first confirmation that the US-Chinese negotiations had fallen through. Analysts scrambled to figure out what would happen, as the safe-haven assets surged.
2 – Buy American
Trump was a new arrival at 1600 Pennsylvania Avenue at the time. He sent his first major market moving Tweet in response to news that Toyota was planning to build a manufacturing plant in Mexico instead of the US. In the middle of the trading session he tweeted:
3 – Locked and Loaded
Traders in the early morning of September 14th, 2019 didn’t initially pay much attention to a fire in a Saudi refinery. It’s not an unusual occurrence.
However, the story quickly took on major geopolitical implications when it became apparent that it was a terrorist attack. Tensions between the US and Iran escalated. And, before markets opened on the 16th, Trump tweeted:
This prompted a rush for safe-haven assets over fears of imminent military action; The Dow closed down by over 200 points when it was all said and done.
4 – Twitter Diplomacy
In June 2019, Trump came out of the G20 meeting and a bilateral with Chinese President Xi, catching everyone by surprise with:
There were a few hours of uncertainty as analysts tried to figure out the implications. However, soon after, Trump and Kim Jong-un met at the DMZ for a photo-op that helped buoy risk sentiment over easing political tensions.
When markets opened the next day, the USDJPY popped up 60 pips, as markets across Asia moved higher.