The stock market is set to react tomorrow to President Joe Biden’s decision not to seek reelection, which is expected to introduce significant volatility.
Market experts anticipate that Biden’s announcement will heighten economic uncertainty as the Democratic Party quickly rallies behind a new candidate, with Biden endorsing Vice President Kamala Harris as his preferred successor.
Josh Thompson, CEO of Impact Health USA, remarked that if Biden withdraws from the race, the immediate response from the market is likely to reflect instability and unpredictability. He noted that investors generally favor a stable environment, and such a major political change could disrupt that.
In response to this uncertainty, investors may turn towards safe-haven assets such as gold, silver, and the Swiss franc, which tend to be more resilient during times of political and economic turmoil.
There is also the potential for the “Trump Trade” to lose momentum. This trading strategy has gained traction since former President Donald Trump, the Republican frontrunner, appeared to outperform Biden in debates and survived an assassination attempt.
The “Trump Trade” encapsulates market behaviors and investor strategies that align with the prospect of a second Trump administration. Trump, a former real estate magnate, previously fostered favorable conditions for business during his presidency, benefiting sectors such as healthcare, banking, cryptocurrency, oil stocks, and companies like Tesla and Trump Media and Technology Group.
Ed Mills, a Washington policy analyst at Raymond James, indicated that while Biden’s exit from the race may momentarily stall the “Trump Trade,” they do not foresee a significant impact on the broader market. According to Mills, the current odds remain at 60% favoring Trump and 40% for Biden or another Democratic candidate.