The stock market is poised for a fluctuating opening tomorrow following the announcement that President Joe Biden will not seek reelection, leading to increased economic uncertainty. This comes as the Democratic Party looks to back a new candidate, with Biden endorsing Vice President Kamala Harris for the nomination.
Experts suggest that if President Biden officially steps back from the race, market reactions are likely to be volatile, as investors typically favor stability and predictability. Josh Thompson, CEO of Impact Health USA, commented that such a significant political development would disrupt the current economic landscape.
This uncertainty might drive investors toward safe-haven assets such as gold, silver, and the Swiss franc, which are typically less impacted by political and economic instability. Additionally, the recent momentum of the “Trump Trade” could stagnate, as traders recalibrate their market strategies in light of the evolving political situation.
The “Trump Trade” reflects the market’s response to the possibility of another Trump presidency, characterized by favorable conditions for business sectors like healthcare, banking, cryptocurrency, oil, and companies like Tesla and Trump Media and Technology Group.
Despite potential shifts, Raymond James Washington policy analyst Ed Mills stated that current electoral odds remain unchanged with Trump at a 60% likelihood versus a 40% chance for Biden or a Democrat challenger. He noted that while a withdrawal by Biden could result in a temporary slowdown of the “Trump Trade,” a broader market reaction is not anticipated.