The stock market is set to react tomorrow to the announcement that President Joe Biden will not seek reelection, a move expected to introduce significant volatility.
As Democrats scramble to rally behind a new candidate, Biden has endorsed Vice President Kamala Harris as the potential nominee.
Josh Thompson, CEO of Impact Health USA, expressed to Yahoo Finance that if Biden withdraws from the race, market reaction would likely be marked by volatility and uncertainty. He noted that investors tend to favor stability and predictability, suggesting that this political shift would disrupt those elements.
In response to the anticipated uncertainty, investors might gravitate toward safe-haven assets such as gold, silver, and the Swiss franc, which tend to be more resilient during periods of political and economic instability.
Additionally, there may be a slowdown in what is termed the “Trump Trade.” This trend has gained traction following former President Donald Trump’s strong debate performance against Biden and recent security threats against him. The term refers to market behaviors influenced by the prospect of a second Trump administration. His presidency was characterized by a pro-business stance, benefiting sectors like healthcare, banking, cryptocurrency, oil, and companies like Tesla, as well as Trump Media and Technology Group.
According to Ed Mills, a policy analyst at Raymond James, the electoral odds are not likely to shift immediately, with a current forecast of 60% for Trump and 40% for Biden or the Democrats. He indicated that while the “Trump Trade” may stall as the market reassesses the political landscape, a larger market reaction is not expected.