The stock market is set to experience a turbulent opening tomorrow following the announcement that President Joe Biden will not seek reelection. This news is expected to introduce significant volatility into the markets as Democrats work to support a new candidate, with Biden endorsing Vice President Kamala Harris as his preferred successor.
Josh Thompson, CEO of Impact Health USA, indicated that if Biden were to withdraw from the race, the markets would likely react with uncertainty. Investors tend to favor stability, and such a notable political change could disrupt this balance.
This uncertainty may lead investors to gravitate towards safer assets, such as gold, silver, and the Swiss franc, which are typically less influenced by political and economic fluctuations.
Additionally, there is potential for a slowdown in what is being termed the “Trump Trade.” This refers to the market trends resulting from expectations surrounding a second term for former President Donald Trump, who gained momentum after a recent debate and overcoming an assassination attempt. Under Trump, there was a favorable climate for business, which benefitted various sectors, including healthcare, banking, cryptocurrency, and oil, along with stocks like Tesla and Trump Media and Technology Group.
Ed Mills, a Washington policy analyst with Raymond James, mentioned in a note to CNBC that while a Biden exit could lead to a reassessment of the electoral odds, it may not prompt a significant immediate reaction in the broader market.