Tomorrow, the stock market is expected to react to the announcement that President Joe Biden will not seek reelection, likely resulting in significant volatility.
This decision introduces a wave of economic uncertainty as Democrats quickly mobilize to rally behind a new candidate, with Biden having endorsed Vice President Kamala Harris for the nomination.
Josh Thompson, CEO of Impact Health USA, noted that should Biden confirm his withdrawal from the race, the immediate market response would probably be marked by instability. “Investors generally prefer stability and predictability, and such a significant political shift would disrupt both,” he expressed in a recent interview.
In light of this uncertainty, investors may shift their focus to safe-haven assets like gold, silver, and the Swiss franc, which tend to be less sensitive to political and economic disruptions.
Additionally, the recent trend identified as the “Trump Trade,” which gained momentum following Donald Trump’s strong debate performance and survival of an assassination attempt, could experience a slowdown. This trade reflects investor behaviors and market movements driven by the anticipated prospect of a second Trump administration. While Trump, previously a real estate mogul, maintained a pro-business stance during his presidency, sectors like healthcare, banking, cryptocurrency, oil, and companies such as Tesla and the Trump Media and Technology Group are viewed as potential beneficiaries of a second term.
Ed Mills, a policy analyst at Raymond James, mentioned that despite the possible impact on market dynamics, they do not plan to adjust electoral odds significantly (60% Trump vs. 40% Biden/Dem) as the market re-evaluates the situation. Mills added that while the ‘Trump trade’ may experience a pause, a widespread market reaction is not anticipated.