The stock market is poised for a significant opening tomorrow following the announcement that President Joe Biden will not seek reelection, which is expected to create volatility in the financial landscape.
Biden’s decision has introduced economic uncertainty, with Democrats now rallying behind a new candidate, specifically Vice President Kamala Harris, who has received his endorsement.
Josh Thompson, CEO of Impact Health USA, expressed concern about the immediate market response. “If President Biden were to announce his withdrawal from the reelection race, the immediate market reaction would likely be one of volatility and uncertainty,” he stated. “Investors generally prefer stability and predictability, and such a significant political shift would disrupt both.”
In light of this uncertainty, investors may gravitate towards safe-haven assets such as gold, silver, and the Swiss franc, which tend to be less sensitive to political and economic fluctuations.
Additionally, analysts speculate that this scenario could halt the momentum of the “Trump Trade,” which has been vibrant since former President Donald Trump outperformed Biden in a recent debate and survived an assassination attempt. The “Trump Trade” describes market behaviors influenced by the expectation of a Trump administration’s return. Trump’s previous tenure was marked by pro-business policies that benefitted various sectors including healthcare, banking, cryptocurrency, oil, and even companies like Tesla and Trump Media and Technology Group.
Ed Mills, a policy analyst at Raymond James, indicated that while a Biden exit could lead to a reevaluation of the electoral landscape, he does not expect significant shifts in the overall market. “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,” he noted in a recent communication with CNBC.