The stock market is poised for a turbulent opening tomorrow following the announcement that President Joe Biden will not seek reelection. This development is expected to heighten economic uncertainty as Democrats quickly rally support for a new candidate, with Biden endorsing Vice President Kamala Harris as the preferred nominee.
According to Josh Thompson, CEO of Impact Health USA, the market will likely respond with volatility and unease in the wake of Biden’s withdrawal. “Investors generally prefer stability and predictability, and such a significant political shift would disrupt both,” Thompson remarked in an interview over the weekend.
In response to this uncertainty, investors may turn to safe-haven assets such as gold, silver, and the Swiss franc, which tend to perform better during times of political and economic turmoil.
Additionally, this situation could impact the so-called “Trump Trade,” which has gained momentum since former President Donald Trump’s strong debate performance against Biden and his recent survival of an assassination attempt. The Trump Trade reflects market behaviors influenced by the potential for a second Trump administration. During his presidency, Trump had a pro-business approach that primarily benefited sectors like healthcare, banking, cryptocurrency, oil stocks, Tesla, and Trump Media and Technology Group.
Despite the changes, Raymond James Washington policy analyst Ed Mills noted that the electoral odds would remain largely unchanged with a projected split of 60% for Trump and 40% for Biden or another Democratic candidate. “We could see a stalling out of the recent ‘Trump trade’ as the market reassesses the race, but we do not see a broader market reaction,” Mills shared in a note to CNBC last week.