The stock market is set to experience significant volatility following the announcement that President Joe Biden will not seek reelection, a development that creates economic uncertainty as Democrats scramble to rally behind a new candidate, with Biden endorsing Vice President Kamala Harris as the contender.
Josh Thompson, CEO of Impact Health USA, indicated that the announcement would likely lead to an immediate market reaction characterized by unpredictability. He stated, “Investors generally prefer stability and predictability, and such a significant political shift would disrupt both.”
This uncertainty may drive investors to safer assets, such as gold, silver, and the Swiss franc, which are typically seen as more stable during times of political turmoil.
The news could also impact the so-called “Trump Trade,” which has gained traction since Donald Trump’s strong debate performance against Biden and his survival of an assassination attempt. The Trump Trade reflects market movements and investor reactions based on the possibility of another Trump administration. During his presidency, Trump was particularly favorable to business sectors, and companies in healthcare, banking, cryptocurrency, and oil, along with Tesla and Trump Media and Technology Group, are likely to see benefits should he be elected again.
Ed Mills, a Washington policy analyst with Raymond James, noted that the electoral odds would not shift dramatically (currently standing at 60% in favor of Trump versus 40% for Biden or a Democrat candidate). He mentioned that while the “Trump Trade” might stall as the market reevaluates the electoral landscape, a broader market reaction is not anticipated.