The stock market is set to open tomorrow amidst news that President Joe Biden will not seek reelection, creating a situation likely to induce volatility.
A study indicates that California’s new $20 minimum wage for fast food workers has not resulted in job losses. This decision introduces economic uncertainty, particularly as Democrats rally support for a new candidate, with Biden endorsing Vice President Kamala Harris as the potential nominee.
Josh Thompson, CEO of Impact Health USA, stated over the weekend that if President Biden announces his withdrawal from the race, the markets are expected to respond with volatility and uncertainty. Investors typically favor stability, and such a profound political change would disrupt that environment.
This uncertainty may lead investors to seek safe-haven assets, such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic turmoil.
Additionally, there is a possibility that the momentum of the “Trump Trade” could stall. This trading strategy emerged as former President Donald Trump gained traction against Biden during debates and survived an assassination attempt. The Trump Trade reflects market behavior linked to the expectations of a second Trump administration. Trump’s previous presidency was viewed as favorable for business, benefiting sectors like healthcare, banking, cryptocurrency, oil, as well as companies like Tesla and Trump Media and Technology Group.
Ed Mills, a policy analyst at Raymond James, noted that while a Biden withdrawal could prompt a reassessment of the electoral landscape, they’re not planning on altering their electoral odds, currently estimating 60% for Trump versus 40% for Biden or a Democrat candidate. Mills suggested that a stall could occur in the recent “Trump trade,” but anticipated no broader market repercussions.