Tomorrow, the stock market is set to open amidst the news that President Joe Biden has decided not to seek reelection, likely leading to increased volatility. The announcement is expected to heighten economic uncertainty as Democrats scramble to support a new candidate, with Biden endorsing Vice President Kamala Harris as the nominee.
Josh Thompson, CEO of Impact Health USA, noted that if Biden publicly withdraws from the race, investors might react with uncertainty. “Investors generally prefer stability and predictability, and such a significant political shift would disrupt both,” he stated.
This uncertainty could drive investors toward safer assets, such as gold, silver, and the Swiss franc, which tend to be less sensitive to political and economic instability.
There is also speculation regarding a potential slowdown in the so-called “Trump Trade,” a trend that has gained traction following former President Donald Trump’s strong debate performance against Biden and his recent survival of an assassination attempt. This term refers to the market behavior that anticipates a second Trump administration, which is expected to favor sectors like healthcare, banking, cryptocurrency, oil, Tesla, and Trump Media and Technology Group.
Ed Mills, a policy analyst at Raymond James, mentioned in a note to CNBC that while there could be a pause in the momentum of the “Trump Trade,” they do not foresee a major impact on the broader market. “Should Biden leave the race, we would not immediately change our electoral odds—60% Trump versus 40% Biden/Dem,” he wrote.