The stock market is poised for a volatile opening tomorrow following President Joe Biden’s announcement that he will not seek reelection. This shift is likely to heighten economic uncertainty as the Democratic Party rushes to rally behind a new candidate, with Biden endorsing Vice President Kamala Harris as a potential nominee.
Market expert Josh Thompson, CEO of Impact Health USA, commented on the potential implications of Biden’s withdrawal, stating, “If President Biden were to announce his withdrawal from the reelection race, the immediate market reaction would likely be one of volatility and uncertainty. Investors generally prefer stability and predictability, and such a significant political shift would disrupt both.”
This uncertainty may lead investors to flock to safe-haven assets like gold, silver, and the Swiss franc, which tend to be less affected by political and economic turmoil. Additionally, the situation might slow down what’s been termed the “Trump Trade,” which has gained momentum as former President Donald Trump has gained popularity both in debates and after surviving an assassination attempt.
The “Trump Trade” reflects market behavior in response to the likelihood of a second Trump administration. Businesses such as healthcare, banking, cryptocurrency, and oil, along with companies like Tesla and Trump Media and Technology Group, are viewed as potential beneficiaries should Trump return to power.
Analyst Ed Mills from Raymond James indicated that despite the uncertainty, unless conditions change dramatically, there will not be an immediate alteration in electoral odds, which stand at 60% for Trump versus 40% for Biden or another Democratic candidate. He added that although the recent Trump trade may face a slowdown as the market reevaluates the political landscape, he does not anticipate a widespread market reaction.