As the stock market prepares to open tomorrow, it faces potential volatility following the news that President Joe Biden has announced he will not seek reelection. This decision is expected to heighten economic uncertainty as Democrats quickly rally to support a new candidate, with Biden endorsing Vice President Kamala Harris as his preferred successor.
Josh Thompson, CEO of Impact Health USA, noted that if Biden were to formally withdraw from the race, investors would likely react with increased volatility and uncertainty. “Investors generally prefer stability and predictability, and such a significant political shift would disrupt both,” he stated.
This political uncertainty could lead investors to flock to safe-haven assets such as gold, silver, and the Swiss franc, which tend to be less affected by fluctuations in the political and economic landscape.
Additionally, there is potential for the “Trump Trade” to lose momentum. This term refers to the market’s behavior in response to the possibility of a second Trump administration, especially after the former president recently showcased strong performances in debates and overcame an assassination attempt. Trump’s previous presidency was marked by policies favorable to business sectors, including healthcare, banking, cryptocurrency, oil stocks, and companies like Tesla and the Trump Media and Technology Group.
Ed Mills, a policy analyst at Raymond James, suggested that while Biden’s exit could stall the momentum of the recent “Trump Trade,” it may not dramatically alter the overall market landscape. He indicated that the electoral odds might remain unchanged at 60% for Trump and 40% for Biden or a Democratic candidate, despite the shifting political dynamics.