Tomorrow, the stock market is expected to react to the announcement that President Joe Biden will not seek reelection, leading to anticipated volatility. This news comes as Democrats rally behind a new candidate, with Biden endorsing Vice President Kamala Harris for the nomination.
Josh Thompson, CEO of Impact Health USA, shared insights over the weekend, stating, “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 uncertainty may drive investors toward safer assets, such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic turmoil.
Additionally, there is a chance of stagnation in the so-called “Trump Trade,” which has gained momentum since Donald Trump, the former president and current Republican nominee, had strong debate performances and survived an assassination attempt. The Trump Trade refers to market behaviors influenced by the anticipated benefits of a potential second Trump administration. His presidency previously favored business interests, and sectors like healthcare, banking, cryptocurrency, oil stocks, Tesla, and Trump’s own media company are expected to benefit.
Ed Mills, a Washington policy analyst at Raymond James, noted in a recent report shared with CNBC, “Should Biden leave the race, we would not immediately change our electoral odds (60% Trump vs. 40% Biden/Dem). We could see a stalling out of the recent ‘Trump trade’ as the market reassesses the race, but we do not expect a broader market reaction.”