Tomorrow’s stock market opening is set to be influenced significantly by news that President Joe Biden will not seek reelection, which is likely to trigger market volatility.
The announcement brings economic uncertainty to the forefront as the Democratic Party rushes to rally behind a new candidate, with Biden endorsing Vice President Kamala Harris as the potential nominee.
Josh Thompson, CEO of Impact Health USA, commented over the weekend that the market would probably react with volatility and uncertainty if Biden steps back from the race. “Investors generally prefer stability and predictability, and such a significant political shift would disrupt both,” he noted.
This uncertainty may lead investors to seek safe-haven assets, such as gold, silver, and the Swiss franc, which tend to be less sensitive to political and economic fluctuations.
Additionally, the development could stall what is known as the “Trump Trade,” a trading pattern that has gained momentum following former president Donald Trump’s strong debate performance against Biden and a recent assassination attempt.
The “Trump Trade” reflects how investors react to the prospect of another Trump presidency. Trump’s administration was considered favorable to business, benefiting sectors such as healthcare, banking, cryptocurrencies, oil stocks, Tesla, and Trump Media and Technology Group.
Ed Mills, a Washington policy analyst at Raymond James, indicated that while Biden’s exit from the race could lead to reassessment in the markets, he does not anticipate a drastic broad market reaction. He maintained a 60% chance of Trump winning versus a 40% chance for Biden or another Democrat.