The stock market is set to experience increased volatility when it opens tomorrow, following the announcement that President Joe Biden will not seek reelection. This development has created an atmosphere of economic uncertainty as the Democratic Party scrambles to unify behind a new candidate, with Biden endorsing Vice President Kamala Harris as his successor.
Josh Thompson, CEO of Impact Health USA, noted that if Biden were to officially withdraw from the race, investors might react with volatility and uncertainty. He emphasized that market participants generally favor stability, and such a significant political change would disrupt that.
This uncertainty could lead investors to seek refuge in safe-haven assets like gold, silver, and the Swiss franc, which tend to be more resilient during times of political and economic unrest.
Additionally, the announcement may slow the momentum of the “Trump Trade,” which has gained traction since former President Donald Trump outperformed Biden in a recent debate and survived an assassination attempt. The “Trump Trade” describes investor behavior in anticipation of a potential second Trump administration, which is thought to favor sectors like healthcare, banking, cryptocurrency, oil, Tesla, and Trump Media and Technology Group.
Despite the shifts, analyst Ed Mills from Raymond James stated that the electoral odds would remain unchanged at 60% for Trump versus 40% for Biden or another Democratic candidate, although the market might reassess the race and see a temporary halt in the “Trump Trade.”