The stock market is set to open tomorrow with the news that President Joe Biden will not be running for reelection, leading to an anticipated wave of volatility.
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The uncertainty brought about by Biden’s decision will push economic instability to the forefront as Democrats rally to support a new candidate. President Biden has endorsed Vice President Kamala Harris to be the nominee.
“If President Biden were to announce his withdrawal from the reelection race, the immediate market reaction would likely be one of volatility and uncertainty,” said Josh Thompson, CEO of Impact Health USA, in an interview with Yahoo Finance. “Investors generally prefer stability and predictability, and such a significant political shift would disrupt both.”
This uncertainty could drive investors towards safe-haven assets like gold, silver, and the Swiss franc, which are less susceptible to political and economic turbulence.
Furthermore, there is the potential for a slowdown in the “Trump Trade,” which has gained momentum following former President and Republican presidential nominee Donald Trump’s strong performance in a recent debate and an assassination attempt he survived.
The Trump Trade refers to market behaviors influenced by the prospect of a second Trump administration. Trump, known for his business-friendly policies during his presidency, is anticipated to benefit sectors such as healthcare, banking, cryptocurrency, and oil, as well as companies like Tesla and Trump Media and Technology Group.
“Should Biden leave the race, we would not immediately change our electoral odds (60% Trump vs. 40% Biden/Dem). We could see a stalling out of the recent ‘Trump Trade’ as the market reassesses the race, but we do not see a broader market reaction,” Raymond James Washington policy analyst Ed Mills stated in a note shared with CNBC last week.
Will Gavin contributed to this article.