The stock market is anticipated to open with significant volatility tomorrow following the news that President Joe Biden will not seek reelection. This unexpected decision is likely to heighten economic uncertainty as Democrats scramble to rally support behind a new candidate, with Biden having endorsed Vice President Kamala Harris as the potential nominee.
Josh Thompson, CEO of Impact Health USA, commented that an announcement from President Biden regarding his withdrawal from the election would likely lead to immediate market fluctuations. Investors tend to favor stability and predictability, so such a major political change could disrupt both.
In response to this uncertainty, investors may shift their focus to safe-haven assets, including gold, silver, and the Swiss franc, which typically perform better during times of political and economic turmoil.
Additionally, there could be a slowdown in the so-called “Trump Trade,” which has gained traction since former President Donald Trump outperformed Biden in a debate and survived an assassination attempt. The “Trump Trade” encompasses market behaviors and trading patterns that arise from the expectation of a second Trump presidency. Trump’s past administration was seen as favorable to business interests, particularly impacting sectors such as healthcare, banking, cryptocurrency, oil stocks, and companies like Tesla and Trump Media and Technology Group.
Ed Mills, a policy analyst at Raymond James, stated that while the electoral odds were not immediately adjusted (60% for Trump versus 40% for Biden or another Democrat), the market may reassess the race, potentially leading to a stall in the recent uptick in the “Trump Trade.” However, he does not foresee a significant broad market reaction at this time.