The stock market is poised for a tumultuous opening tomorrow following the announcement that President Joe Biden will not seek reelection. This decision is expected to heighten economic uncertainty as Democrats scramble to rally behind a new candidate, with Biden endorsing Vice President Kamala Harris as his preferred successor.
Financial experts anticipate that the market could experience significant volatility. Josh Thompson, CEO of Impact Health USA, highlighted that investors tend to favor stability, and a major political shift like this would create disruption and uncertainty in the market.
Such uncertainty might drive investors toward safe-haven assets, including gold, silver, and the Swiss franc, which typically perform better during times of political and economic instability.
Additionally, this development could impact the so-called “Trump Trade,” which has gained traction since former President Donald Trump notably outperformed Biden in a recent debate and survived a serious assassination attempt. The Trump Trade refers to market dynamics where investors react to the potential of a second Trump term. Businesses in sectors such as healthcare, banking, cryptocurrency, and oil, along with Tesla and Trump Media and Technology Group, are seen as likely beneficiaries of a second Trump presidency.
Raymond James Washington policy analyst Ed Mills noted that if Biden exits the race, their electoral odds would remain unchanged at 60% for Trump versus 40% for Biden or a Democratic candidate. However, he suggested that the market might experience a slowdown in the recent “Trump trade” as it recalibrates in response to the shifting political landscape, but did not foresee a broader market fallout.