The stock market is expected to experience volatility when it opens tomorrow, following the announcement that President Joe Biden will not seek reelection. This development raises significant economic uncertainty as Democrats move to unite behind a new candidate, with Biden endorsing Vice President Kamala Harris for the nomination.
Josh Thompson, CEO of Impact Health USA, suggested that Biden’s withdrawal could lead to an immediate market response characterized by instability and unpredictability. Investors typically favor a stable economic environment, and such a political change could disrupt that.
As a result, an increase in interest for safe-haven assets like gold, silver, and the Swiss franc is anticipated, as these assets tend to be less affected by political and economic turmoil.
Moreover, the shift in the political landscape might impact what is referred to as the “Trump Trade,” which has seen market gains following former President Donald Trump’s strong debate performances and recent survival of an assassination attempt. This trade reflects investor behavior based on the implications of a potential second Trump administration.
Historically, Trump was known for fostering a business-friendly environment, potentially casting a favorable light on sectors such as healthcare, banking, cryptocurrency, and oil stocks, along with companies like Tesla and Trump Media and Technology Group.
Raymond James Washington policy analyst Ed Mills indicated that while the electoral odds may not shift dramatically (currently assessed at 60% for Trump and 40% for Biden/Democrats), there could be a pause in the momentum of the “Trump Trade” as the market recalibrates its views on the race.