The stock market is poised for a volatile opening tomorrow following the announcement that President Joe Biden will not seek reelection. This development is likely to heighten economic uncertainty as the Democratic Party rallies around a new candidate, with Biden endorsing Vice President Kamala Harris as his potential successor.
Josh Thompson, CEO of Impact Health USA, commented that should Biden officially withdraw from the race, market reactions would likely reflect instability. “Investors tend to favor stability and predictability, and such a significant political change could disrupt those factors,” he stated to Yahoo Finance over the weekend.
In response to this uncertainty, investors may gravitate towards safer assets such as gold, silver, and the Swiss franc, which are less affected by political and economic upheaval.
Additionally, there may be a slowdown in what is termed the “Trump Trade,” which has gained traction following former President Donald Trump’s strong debate performances and recent survival of an assassination attempt. This trade reflects the market’s response to the prospect of another Trump administration, as he was viewed as supportive of business interests during his presidency. Key sectors expected to benefit from a possible Trump victory include healthcare, banking, cryptocurrency, oil stocks, Tesla, and the Trump Media and Technology Group.
Ed Mills, an analyst at Raymond James, indicated in a note to CNBC that while Biden’s exit could alter the electoral landscape, they do not anticipate any immediate change in electoral odds (60% Trump vs. 40% Biden/Dem). Mills noted that while there may be a reassessment of the “Trump trade,” a broader market reaction is not expected.