The stock market is set to open tomorrow amid significant news that President Joe Biden has decided not to seek reelection, which is expected to induce volatility in the markets.
Investors are curious about how Disney will find a successor for Bob Iger, with a Morgan Stanley executive leading the search efforts.
The implications of Biden’s decision may heighten economic uncertainty, as Democrats are likely to rally behind a new candidate, with Vice President Kamala Harris receiving Biden’s endorsement for the nomination.
Josh Thompson, CEO of Impact Health USA, commented to Yahoo Finance over the weekend that if Biden were to announce his withdrawal from the race, the immediate market reaction would likely involve volatility and uncertainty. He noted that investors generally favor stability, and such a major political change could disrupt that balance.
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 affected by political and economic instability.
Additionally, there is a potential for a slowdown in the so-called “Trump Trade.” This trade phenomenon gained traction after former President Donald Trump notably outperformed Biden in a debate and survived an assassination attempt. The “Trump Trade” describes market behaviors and investor strategies that respond to the prospect of a second Trump administration. As a businessman who previously fostered strong ties with corporate interests, a second Trump term is projected to benefit sectors like healthcare, banking, cryptocurrency, and oil, along with companies like Tesla and Trump Media and Technology Group.
Ed Mills, a Washington policy analyst at Raymond James, remarked that while Biden’s exit from the race could lead to a reevaluation of the electoral landscape, it would not necessarily prompt an immediate overhaul of their electoral odds, currently estimated at 60% for Trump against 40% for a Biden/Democratic candidate. Mills stated that while there may be a temporary stalling of the “Trump trade,” he does not anticipate a significant broader market reaction.