The stock market is expected to experience volatility tomorrow following President Joe Biden’s announcement that he will not seek reelection. This decision is likely to introduce economic uncertainty, as Democrats quickly rally behind a new candidate, with Biden endorsing Vice President Kamala Harris for the nomination.
Josh Thompson, CEO of Impact Health USA, commented that if Biden confirms his withdrawal from the race, the market would likely react with significant volatility and uncertainty. Investors typically favor stability, and such a major political change could disrupt expected outcomes.
In response to this uncertainty, investors might turn to safe-haven assets, such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic fluctuations.
Additionally, we could witness a slowdown in the so-called “Trump Trade,” which has gained momentum since former President Donald Trump outperformed Biden in a recent debate and survived an assassination attempt. The Trump Trade involves how market behaviors shift based on the potential of another Trump administration. Trump’s presidency was marked by strong support for business interests, benefiting sectors such as healthcare, banking, cryptocurrency, oil, Tesla, and the Trump Media and Technology Group.
Ed Mills, a policy analyst at Raymond James, indicated that if Biden exits the race, there may not be an immediate revision of electoral odds (currently at 60% for Trump vs. 40% for Biden/Dem). He noted that while the “Trump Trade” might pause as the market reassesses the political landscape, he does not anticipate a broader market impact.