The stock market is set to react tomorrow as news emerges that President Joe Biden will not seek reelection, leading to expected volatility.
A recent Coinbase poll indicates that Donald Trump and Vice President Kamala Harris are in a close competition for the support of crypto voters.
This unexpected decision by Biden introduces economic uncertainty, compelling Democrats to rally around a new candidate, with Biden endorsing Harris to take the lead.
Josh Thompson, CEO of Impact Health USA, explained to Yahoo Finance that “if President Biden were to announce his withdrawal from the reelection race, the immediate market reaction would likely be one of volatility and uncertainty.” He noted that investors typically favor stability, and such a major political development would disrupt that.
In response to this uncertainty, investors might gravitate towards safe-haven assets such as gold, silver, and the Swiss franc, which tend to be less impacted by political and economic fluctuations.
Moreover, the sudden political shift could potentially stall the “Trump Trade,” a trend that gained momentum after Trump outperformed Biden in a recent debate and survived an assassination attempt.
The “Trump Trade” refers to how the market responds to the prospect of a second Trump administration. During his presidency, Trump, a former real estate mogul, was perceived as very supportive of business interests. Sectors expected to benefit from a second Trump presidency include healthcare, banking, cryptocurrency, and oil stocks, along with Tesla and Trump Media and Technology Group.
Ed Mills, a Washington policy analyst at Raymond James, commented that while Biden’s departure could lead to a reassessment of electoral odds, he does not anticipate a widespread market reaction. Currently, he estimates the odds at 60% for Trump versus 40% for Biden or a Democrat challenger.