The stock market is poised for a turbulent opening tomorrow following the announcement that President Joe Biden will not seek reelection. This decision is expected to heighten economic uncertainty, as Democrats rally behind a potential new candidate, with Biden endorsing Vice President Kamala Harris as the nominee.
Financial experts predict a volatile response from the market. Josh Thompson, CEO of Impact Health USA, remarked that a withdrawal of Biden from the race would likely trigger immediate disarray. “Investors generally prefer stability and predictability, and such a significant political shift would disrupt both,” he told Yahoo Finance.
This climate of uncertainty may drive investors towards safer assets, including gold, silver, and the Swiss franc, which tend to be less impacted by political upheaval.
Furthermore, there is potential for a slowdown in the “Trump Trade,” a market trend that has gained traction since former President Donald Trump outperformed Biden in a recent debate and survived an assassination attempt. This trade represents how investors respond to the possibility of Trump’s return to the presidency, as his administration was known for prioritizing business interests. Key sectors expected to benefit from another Trump term include healthcare, banking, cryptocurrencies, oil stocks, and companies like Tesla and Trump Media and Technology Group.
Raymond James Washington policy analyst Ed Mills noted, “Should Biden leave the race, we would not immediately change our electoral odds (60% Trump vs. 40% Biden/Dem). While we could see a stall in the recent ‘Trump trade’ as the market reassesses the race, we do not anticipate a broader market reaction.”