The stock market is poised for a turbulent opening tomorrow following the announcement that President Joe Biden will not seek reelection. This development is expected to introduce significant volatility into the markets.
Shares of Trump Media plummeted by 7% after the company disclosed another quarterly loss. The economic implications of Biden’s decision will likely dominate discussions, as Democrats work swiftly to consolidate support around a new candidate, with Vice President Kamala Harris receiving the President’s endorsement.
Josh Thompson, CEO of Impact Health USA, commented to Yahoo Finance over the weekend that a Biden withdrawal would prompt an immediate market reaction characterized by volatility and uncertainty. He indicated that investors generally favor stability, and such a major political change could disrupt market predictability.
This uncertainty might drive investors toward safe-haven assets, including gold, silver, and the Swiss franc, which tend to be less affected by political and economic turmoil.
Moreover, there is speculation about a potential slowdown of the “Trump Trade,” which has gained momentum since former President Donald Trump outperformed Biden in a recent debate and survived an assassination attempt. The “Trump Trade” describes market behaviors influenced by the prospects of another Trump administration. Trump’s previous presidency was marked by policies favorable to business interests, benefitting sectors such as healthcare, banking, cryptocurrency, oil, and companies like Tesla, along with Trump Media and Technology Group.
While some analysts anticipate a reassessment of the market in light of Biden’s exit, they do not foresee any significant shifts to their electoral predictions. Ed Mills, a policy analyst at Raymond James, stated that while there may be a slowdown in the “Trump trade,” the broader market reaction is not expected to be substantial.