The stock market is poised for a volatile opening tomorrow following the announcement that President Joe Biden will not seek reelection. This decision is expected to heighten economic uncertainty as Democratic leaders rally around a new candidate, with Biden endorsing Vice President Kamala Harris as the likely nominee.
Josh Thompson, CEO of Impact Health USA, noted that news of Biden’s withdrawal would likely trigger immediate market fluctuations. “Investors generally prefer stability and predictability, and such a significant political shift would disrupt both,” he explained.
This uncertainty may lead investors to seek safe-haven assets such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic turmoil.
Additionally, the recent momentum behind the so-called “Trump Trade” could stall. This trend has gained traction since former President Donald Trump outperformed Biden in a recent debate and survived an assassination attempt. The Trump Trade reflects the market’s behavior in anticipation of a potential second Trump administration, which is expected to favor sectors like healthcare, banking, cryptocurrency, oil, and companies such as Tesla and Trump Media and Technology Group.
Ed Mills, a policy analyst at Raymond James, commented that even if Biden exits the race, they do not foresee an immediate change in electoral odds, maintaining a 60% likelihood for Trump against a combined 40% for Biden and other potential Democratic candidates. He indicated that while the Trump Trade may stall as the market reassesses the political landscape, a significant broader market reaction is not anticipated.