The stock market is set to open tomorrow amidst the news that President Joe Biden will not seek reelection, with volatility expected to follow.
This announcement introduces significant economic uncertainty as Democrats look to rally behind a new candidate, with Biden endorsing Vice President Kamala Harris as the potential nominee.
Josh Thompson, CEO of Impact Health USA, noted that if President Biden announces his exit from the race, it would likely result in immediate market volatility. Investors typically favor stability, and such a major political change could disrupt that sense of predictability.
In response to the anticipated uncertainty, investors may flock to safe-haven assets such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic fluctuations.
Additionally, there could be a slowdown in the so-called “Trump Trade,” which has gained momentum following former President Donald Trump’s performance in recent debates and a narrowly avoided assassination attempt. This trade reflects market behaviors influenced by the prospect of a second Trump administration. Historically, Trump has been supportive of business interests, and industries such as healthcare, banking, cryptocurrency, oil stocks, and companies like Tesla and Trump Media and Technology Group could benefit from his return to power.
However, Raymond James Washington policy analyst Ed Mills indicated that if Biden withdraws, they would not immediately adjust their electoral odds, estimating a 60% chance for Trump versus 40% for Biden or another Democratic candidate. Mills mentioned that while there may be a reassessment of the race that could stall the current “Trump trade,” he does not foresee a wider market reaction.