The stock market is set to face potential volatility when it opens tomorrow, following President Joe Biden’s announcement that he will not seek reelection. This news has heightened economic uncertainty, with Democrats now rallying around a new candidate, with Biden endorsing Vice President Kamala Harris for the nomination.
Josh Thompson, CEO of Impact Health USA, commented that a withdrawal by President Biden would likely trigger a turbulent immediate market response. “Investors generally prefer stability and predictability, and such a significant political shift would disrupt both,” he stated.
This uncertainty may lead investors to favor safe-haven assets, such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic instability.
Additionally, the announcement could also impact the momentum of the “Trump Trade,” a term used to describe market behavior favorable to former President Donald Trump, especially following his recent performance in debates and a survival from an assassination attempt.
The Trump Trade often reflects investors’ expectations surrounding a potential second Trump administration, known for being business-friendly during his presidency. Sectors that could benefit from such an outcome include healthcare, banking, cryptocurrency, oil stocks, Tesla, and Trump Media and Technology Group.
Raymond James Washington policy analyst Ed Mills noted that while a departure from the race might stall the current momentum of the Trump Trade as investors reconsider the electoral landscape, it is unlikely to trigger a widespread market reaction.