The stock market is set to experience volatility with the announcement that President Joe Biden will not seek reelection. This news comes as Donald Trump and Kamala Harris are reportedly in close competition for the support of cryptocurrency voters, according to a Coinbase poll.
Biden’s decision introduces economic uncertainty as Democrats work to rally behind a new candidate, with Biden officially backing Vice President Kamala Harris as the potential nominee.
Josh Thompson, CEO of Impact Health USA, noted that such a significant political shift would likely provoke immediate volatility in the markets, stating that investors typically prefer stability and predictability.
This uncertainty may lead investors to turn to safer assets like gold, silver, and the Swiss franc, which tend to be less affected by political and economic turmoil.
There is also a likelihood of a slowdown in what has been termed the “Trump Trade.” This phenomenon has gained momentum since Trump outperformed Biden in a debate and survived an assassination attempt. The Trump Trade reflects investor behavior in response to the potential of a second Trump administration, with sectors such as healthcare, banking, cryptocurrency, oil stocks, Tesla, and the Trump Media and Technology Group expected to benefit.
According to Ed Mills, a policy analyst at Raymond James, if Biden withdraws from the race, they will not immediately alter their electoral odds, estimating a 60% chance for Trump versus a 40% for either Biden or a Democratic candidate. Mills indicated that while a reevaluation of the race could stall the recent Trump Trade, a broader market reaction is not anticipated.