The stock market is expected to open tomorrow amidst the announcement that President Joe Biden will not seek reelection, which is likely to induce volatility.
This decision is anticipated to bring economic uncertainty to the forefront as Democrats quickly rally behind a new candidate, with Biden endorsing Vice President Kamala Harris as the nominee.
Josh Thompson, CEO of Impact Health USA, indicated that if Biden officially withdraws from the race, the market would probably experience immediate volatility and uncertainty. “Investors generally prefer stability and predictability, and such a significant political shift would disrupt both,” he stated.
This uncertainty may lead investors to shift their focus to safe-haven assets like gold, silver, and the Swiss franc, which are less affected by political and economic turbulence.
Another potential outcome could be a slowdown in the so-called “Trump Trade,” which has gained traction since former President Donald Trump outperformed Biden in a debate and survived an assassination attempt.
The “Trump Trade” describes market behaviors and investment patterns in response to the anticipation of a second Trump administration. Trump, known for his support of business interests during his presidency, is expected to benefit a range of sectors including healthcare, banking, cryptocurrency, oil, and technology companies like Tesla and Trump Media and Technology Group.
Raymond James Washington policy analyst Ed Mills noted that while Biden’s exit might lead to a reassessment of the race, it would likely not alter their electoral odds of 60% for Trump versus 40% for Biden or a Democrat challenger. “We could see a stalling out of the recent ‘Trump trade’ as the market reassesses the race, but we do not foresee a broader market reaction,” he added.