The stock market is set to open tomorrow amid speculation that President Joe Biden will not pursue reelection, leading to anticipated volatility.
Strategists advise considering international stocks as the Federal Reserve approaches a decision on interest rate cuts. This potential shift in the political landscape could heighten economic uncertainty, particularly as Democrats seek a new candidate, with Biden endorsing Vice President Kamala Harris as a potential nominee.
Josh Thompson, CEO of Impact Health USA, remarked that if Biden were to announce his withdrawal from the race, the market would likely experience volatility and uncertainty. He noted that investors typically favor stability, and such a major political change could disturb that environment.
This uncertainty may drive investors towards safe-haven assets such as gold, silver, and the Swiss franc, which are generally less affected by political and economic turmoil.
Additionally, the speculation could affect what is known as the “Trump Trade,” which has gained traction following strong performances by former President Donald Trump, especially in debates and following an assassination attempt.
The “Trump Trade” describes market patterns that emerge as investors react to the prospect of a second Trump administration. Under Trump, a former real estate mogul, business interests flourished, benefiting sectors including healthcare, banking, cryptocurrencies, oil, and companies like Tesla as well as Trump Media and Technology Group.
Ed Mills, a policy analyst at Raymond James, indicated that while Biden’s exit from the race might prompt a reassessment of electoral odds—currently standing at 60% for Trump and 40% for Biden or other Democrats—the broader market impact would be limited, suggesting only a potential stall in the “Trump trade” as investors reevaluate the electoral landscape.