The stock market is set to open tomorrow amid news that President Joe Biden will not seek reelection, suggesting that a period of volatility is likely to follow.
The announcement has prompted concerns about economic uncertainty, leading to renewed discussions among Democrats about supporting a new candidate, as Biden has endorsed Vice President Kamala Harris for the nomination.
Josh Thompson, CEO of Impact Health USA, mentioned that the market reaction could be characterized by volatility and uncertainty if Biden formally withdraws from the race. He noted that investors generally favor stability and predictability, and such a significant political shift could disrupt that environment.
In light of this uncertainty, investors may turn to safe-haven assets such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic turmoil.
Additionally, there could be a slowdown in the so-called “Trump Trade,” which has gained momentum following former President Donald Trump’s strong debate performance against Biden and a recent assassination attempt. This trading strategy reflects the market’s response to the potential of a second Trump administration.
Trump, who previously held the presidency, was regarded as business-friendly, and stocks related to healthcare, banking, cryptocurrencies, and oil, as well as Tesla and Trump Media and Technology Group, are anticipated to benefit from another Trump term.
Ed Mills, a Washington policy analyst at Raymond James, stated that while Biden’s exit from the race could temporarily stall the recent “Trump Trade,” it may not lead to significant changes in the broader market dynamics or alter the odds of the electoral race, which still lean towards a 60% chance for Trump versus 40% for Biden or another Democratic nominee.