The stock market is poised for a significant opening tomorrow following President Joe Biden’s announcement that he will not seek reelection, raising expectations of increased volatility. This announcement brings heightened economic uncertainty as Democrats rally around a potential new candidate, with Biden endorsing Vice President Kamala Harris as a frontrunner for the nomination.
Josh Thompson, CEO of Impact Health USA, indicated in a Yahoo Finance interview over the weekend that the market’s immediate reaction could be marked by volatility and uncertainty. He noted, “Investors generally prefer stability and predictability, and such a significant political shift would disrupt both.”
In response to this uncertainty, investors may gravitate towards safe-haven assets such as gold, silver, and the Swiss franc, which tend to be more resilient during times of political and economic instability.
Additionally, there is a chance that the “Trump Trade,” which has gained momentum since former President Donald Trump’s performance in recent debates and the unusual circumstances surrounding his political campaign, could stall. This trade describes the behavior of investors reacting to the potential for a second Trump presidency, which many anticipate would favor sectors such as healthcare, banking, cryptocurrency, oil, Tesla, and Trump Media and Technology Group.
Ed Mills, a policy analyst at Raymond James, noted in a report to CNBC, “Should Biden leave the race, we would not immediately change our electoral odds (60% Trump vs. 40% Biden/Dem). We could see a stalling out of the recent ‘Trump trade’ as the market reassesses the race, but we do not see a broader market reaction.”