The stock market is set to react tomorrow to the announcement that President Joe Biden will not seek reelection, leading to anticipated volatility. This development is expected to heighten economic uncertainty as Democrats scramble to rally behind a new candidate, with Biden having endorsed Vice President Kamala Harris as a potential nominee.
Josh Thompson, CEO of Impact Health USA, indicated in an interview over the weekend that should Biden withdraw from the race, the initial market response would likely reflect volatility and uncertainty. Investors typically favor stability, and such a significant political change could disrupt that.
In light of this uncertainty, investors may turn to safe-haven assets such as gold, silver, and the Swiss franc, which tend to be less influenced by political and economic turmoil.
Additionally, this situation could affect the so-called “Trump Trade,” a market phenomenon that has gained momentum following former President Donald Trump’s strong debate performance against Biden and his recent survival of an assassination attempt. The “Trump Trade” refers to investor behavior anticipated in response to the possibility of another Trump administration, which is expected to favor sectors like healthcare, banking, cryptocurrency, oil, Tesla, and Trump Media and Technology Group.
Despite potential shifts in the market, Raymond James Washington policy analyst Ed Mills noted that if Biden exits the race, the electoral odds might remain unchanged at 60% for Trump versus 40% for Biden or another Democratic candidate. Mills expressed that while there may be a pause in the recent “Trump Trade” as the market reevaluates the electoral landscape, a widespread market reaction is not anticipated.