The stock market is anticipated to exhibit volatility when it opens tomorrow in light of President Joe Biden’s announcement that he will not seek re-election. This decision is expected to highlight economic uncertainty as Democrats rally behind a new candidate, with Biden endorsing Vice President Kamala Harris as the potential nominee.
Josh Thompson, CEO of Impact Health USA, noted over the weekend that an announcement from Biden regarding his withdrawal would likely trigger immediate market reactions characterized by instability. Investors tend to favor a stable and predictable environment, and such a significant political change could disrupt that equilibrium.
In response to this uncertainty, investors may gravitate towards safe-haven assets such as gold, silver, and the Swiss franc, which are typically less affected by political and economic fluctuations.
Furthermore, this development could impact the ongoing “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 reflects market behaviors and investor reactions to the prospect of a second Trump administration. Historically, Trump has been perceived as favorable to business interests during his presidency, with healthcare, banking, cryptocurrency, and oil stocks, as well as Tesla and Trump Media and Technology Group, expected to benefit from another term.
Ed Mills, a Washington policy analyst at Raymond James, indicated that while the market may pause to reassess the political dynamics if Biden exits the race, they do not expect a significant overall market reaction, maintaining electoral odds at 60% for Trump versus 40% for Biden or a Democratic counterpart.