The stock market is anticipated to experience volatility tomorrow following President Joe Biden’s announcement that he will not seek reelection. This shift is expected to create economic uncertainty, especially as Democrats work to rally support for a new candidate, with Biden endorsing Vice President Kamala Harris for the nomination.
Josh Thompson, CEO of Impact Health USA, stated, “If President Biden were to announce his withdrawal from the reelection race, the immediate market reaction would likely be one of volatility and uncertainty. Investors generally prefer stability and predictability, and such a significant political shift would disrupt both.”
In response to this uncertainty, investors might gravitate towards safe-haven assets, including gold, silver, and the Swiss franc, which are less impacted by political and economic fluctuations.
Additionally, the current momentum of the “Trump Trade,” which has gained traction since former President Donald Trump outperformed Biden in a debate and survived an assassination attempt, may be affected. The Trump Trade describes how investors react to the potential of a second Trump administration. Trump, who previously supported business interests during his presidency, could benefit sectors like healthcare, banking, cryptocurrency, and oil stocks, in addition to companies like Tesla and Trump Media and Technology Group.
However, Raymond James Washington policy analyst Ed Mills noted last week that despite the potential for short-term volatility, they do not plan to significantly alter their electoral odds, currently set at 60% for Trump versus 40% for Biden or another Democrat. Mills suggested that there could be a reassessment of the market’s response to the race, but they do not foresee a broader market reaction.