The stock market is poised for a volatile opening tomorrow following the announcement that President Joe Biden will not seek reelection. This development is expected to heighten economic uncertainty as Democrats scramble to support a new candidate, with Biden endorsing Vice President Kamala Harris as the nominee.
Josh Thompson, CEO of Impact Health USA, remarked that if Biden withdraws from the race, market reactions will likely reflect volatility and uncertainty. “Investors generally prefer stability and predictability, and such a significant political shift would disrupt both,” he stated.
In light of this uncertainty, investors may gravitate towards safe-haven assets such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic fluctuations.
Additionally, the market may see a slowdown in the so-called “Trump Trade.” This term describes investment behaviors that arise in anticipation of a potential second Trump administration. Following Donald Trump’s strong performance in recent debates, and despite controversies surrounding him, investors have shown renewed interest in sectors like healthcare, banking, cryptocurrency, and oil, as well as companies like Tesla and the Trump Media and Technology Group.
Ed Mills, a policy analyst at Raymond James, suggested that while a Biden exit from the race could stall the “Trump Trade” temporarily, it would not lead to a significant shift in electoral odds, currently estimated at 60% in favor of Trump and 40% for Biden or another Democratic candidate.