The stock market is set to open tomorrow amid news that President Joe Biden will not seek reelection, leading to expectations of significant volatility.
This announcement places economic uncertainty at the center of discussions as Democrats begin to rally behind a new candidate; Biden has endorsed Vice President Kamala Harris as his preferred nominee.
Josh Thompson, CEO of Impact Health USA, stated that if Biden confirms his withdrawal, the market would likely react with volatility and uncertainty. “Investors generally prefer stability and predictability, and such a significant political shift would disrupt both,” he noted in a recent interview.
The anticipated uncertainty may lead investors to shift towards safe-haven assets, such as gold, silver, and the Swiss franc, which tend to perform better during times of political and economic turmoil.
Additionally, there is concern that the momentum behind the “Trump Trade” could stall. This trade has gained traction following the former president and Republican nominee Donald Trump’s recent performance in debates and surviving an assassination attempt. The “Trump Trade” describes market behaviors based on investors’ expectations of a second Trump administration. During his presidency, Trump was favorable to business interests, benefiting sectors such as healthcare, banking, cryptocurrency, and oil stocks, as well as companies like Tesla and the Trump Media and Technology Group.
Raymond James Washington policy analyst Ed Mills indicated that while Biden’s potential exit from the race could stall the recent “Trump trade,” it would not lead to an immediate change in electoral odds, which currently stand at 60% for Trump versus 40% for Biden or another Democratic candidate.