The stock market is poised for a turbulent opening tomorrow as news breaks that President Joe Biden will not seek reelection. This development is likely to lead to increased volatility in the financial markets.
Biden’s decision introduces economic uncertainty, prompting Democrats to rally support for a new candidate, with the President endorsing Vice President Kamala Harris as the potential nominee.
Josh Thompson, CEO of Impact Health USA, shared insights with Yahoo Finance about the potential market impact. He noted, “If President Biden were to announce his withdrawal from the reelection race, the immediate market reaction would likely be one of volatility and uncertainty. Investors generally prefer stability and predictability, and such a significant political shift would disrupt both.”
This heightened uncertainty may drive investors toward safe-haven assets such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic turmoil.
Additionally, this scenario might stall what is known as the “Trump Trade,” which has been gaining momentum since former President Donald Trump showcased strong performance in recent political debates and survived an assassination attempt.
The “Trump Trade” describes the market’s movements and investor behaviors associated with the prospect of another Trump administration. Trump, who was notably pro-business during his presidency, is expected to benefit various sectors including healthcare, banking, cryptocurrencies, oil stocks, Tesla, and his own Trump Media and Technology Group.
Ed Mills, a policy analyst at Raymond James, commented, “Should Biden leave the race, we would not immediately change our electoral odds (60% Trump vs. 40% Biden/Dem). We could see a stalling of the recent ‘Trump trade’ as the market reassesses the race, but we do not foresee a broader market reaction.”