The stock market is poised for a volatile opening tomorrow following the news that President Joe Biden will not seek reelection. This announcement is set to spark economic uncertainty as Democrats scramble to rally behind a new candidate, with Biden having endorsed Vice President Kamala Harris for the nomination.
Market analysts predict that Biden’s decision could lead to immediate instability. “If President Biden were to announce his withdrawal from the reelection race, the immediate market reaction would likely be one of volatility and uncertainty,” said Josh Thompson, CEO of Impact Health USA. He emphasized that investors favor stability and predictability, and a significant political change could disrupt their expectations.
In light of this uncertainty, investors may gravitate towards safe-haven assets such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic turmoil.
Moreover, the shift could impact the ongoing “Trump Trade,” which has seen increasing momentum since former President Donald Trump’s strong debate performance against Biden and his recent events. The term “Trump Trade” refers to market behaviors connected to the anticipation of a second Trump presidency. Trump, known for his business-friendly policies during his first term, is seen as potentially beneficial for sectors such as healthcare, banking, cryptocurrency, oil, and companies like Tesla and Trump Media and Technology Group.
Ed Mills, a Washington policy analyst at Raymond James, noted that while the market might reassess the electoral landscape, the odds would not change drastically—60% for Trump versus 40% for Biden or another Democrat. He remarked that any potential pullback in the “Trump Trade” would be a recalibration rather than a larger market reaction.