The stock market is set to experience a notable opening tomorrow following the announcement that President Joe Biden will not seek reelection, raising expectations of increased volatility.
Biden’s decision is anticipated to heighten economic uncertainty as the Democratic Party swiftly rallies around a new candidate, with Biden endorsing Vice President Kamala Harris as a potential nominee.
Josh Thompson, CEO of Impact Health USA, mentioned that such a significant political shift would likely lead to a volatile and unpredictable market reaction. He noted that investors typically favor stability, and the announcement could disrupt that.
This uncertainty might drive investors towards safe-haven assets, such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic shifts.
Additionally, there is a chance that the so-called “Trump Trade” could stall. This trading strategy, which has gained momentum since former President Donald Trump’s recent debate performance and survival of an assassination attempt, reflects how investors react to the prospect of a second Trump administration. Trump’s previous presidency was seen as beneficial for various sectors, including healthcare, banking, cryptocurrency, and oil stocks, along with companies like Tesla and Trump Media and Technology Group.
Raymond James Washington policy analyst Ed Mills indicated that if Biden withdraws, they would not immediately alter their electoral odds, currently estimating a 60% likelihood for Trump versus 40% for Biden or another Democratic candidate. He added that although the “Trump Trade” might face a reevaluation, a broader market reaction is not expected.