Tomorrow’s stock market opening is set to be impacted by the news that President Joe Biden will not seek reelection, resulting in expected volatility.
This decision has raised economic uncertainty, prompting Democrats to rally behind a new candidate. Biden has endorsed Vice President Kamala Harris as the potential nominee.
Josh Thompson, CEO of Impact Health USA, highlighted that if Biden officially announces his exit from the race, the market is likely to experience immediate volatility and uncertainty. Investors typically favor stability, and such a significant political change could disrupt that.
In light of this uncertainty, investors may shift their focus toward safer assets like gold, silver, and the Swiss franc, which tend to be less affected by political and economic turmoil.
Additionally, there may be a slowdown in what has been termed the “Trump Trade,” which has gained traction since former President Donald Trump outperformed Biden in debates and survived an assassination attempt. This term describes market behaviors in response to the possibility of a second Trump administration. As a businessman, Trump was perceived as favorable to various sectors, including healthcare, banking, cryptocurrency, oil, and major companies like Tesla and Trump Media and Technology Group.
Ed Mills, a Washington policy analyst at Raymond James, noted that if Biden withdraws from the race, their electoral odds of 60% for Trump versus 40% for Biden/Democrats would not immediately change. However, there may be a pause in the momentum of the “Trump Trade” as the market reevaluates the political landscape, though a broader market reaction is not anticipated.