The stock market is expected to experience volatility as it opens tomorrow in light of President Joe Biden’s announcement that he will not seek reelection. This development is likely to heighten economic uncertainty, prompting the Democratic Party to rally behind a new candidate, likely Vice President Kamala Harris, whom Biden has endorsed.
Josh Thompson, CEO of Impact Health USA, commented that a withdrawal by President Biden would trigger immediate market reactions characterized by instability and unpredictability. Investors typically favor environments that offer stability, and such a notable political change could disrupt that equilibrium.
In response to this uncertainty, investors may shift their focus toward safe-haven assets, including gold, silver, and the Swiss franc, which tend to hold value better during times of political and economic turmoil.
Additionally, the potential exit of Biden from the race could disrupt the “Trump Trade,” a market trend that has gained momentum since Donald Trump, the former president and current Republican candidate, outperformed Biden in debates and survived an assassination attempt. The “Trump Trade” represents how investor behavior fluctuates with the prospect of a second Trump presidency. During his presidency, Trump was viewed favorably by business interests, and sectors such as healthcare, banking, cryptocurrency, and oil, along with companies like Tesla and Trump Media and Technology Group, are expected to benefit from his potential return to power.
Analyst Ed Mills from Raymond James stated that while Biden’s departure could stall the recent momentum of the “Trump Trade,” there may not be a significant broader market reaction immediately.