The stock market is poised for a turbulent opening tomorrow following the announcement that President Joe Biden will not seek reelection. This development is expected to create significant volatility in the markets.
As the political landscape shifts, with Democrats now rallying around a new candidate—Vice President Kamala Harris, endorsed by Biden—the economic implications remain uncertain. Experts predict that such a major political change could spur a flight to safe-haven assets, including gold, silver, and the Swiss franc, which tend to perform better during periods of instability.
Josh Thompson, CEO of Impact Health USA, shared insights with Yahoo Finance, stating, “If President Biden were to announce his withdrawal from the reelection race, the immediate market reaction would likely be one of volatility and uncertainty. Investors generally prefer stability and predictability, and such a significant political shift would disrupt both.”
Additionally, the current trend known as the “Trump Trade,” gaining traction since former President Donald Trump’s debate performance and an attempted assassination, may also face a setback. This market behavior relates to investor optimism regarding potential gains from a second Trump term, particularly benefiting sectors like healthcare, banking, cryptocurrency, oil, Tesla, and Trump Media and Technology Group.
Ed Mills, a Washington policy analyst at Raymond James, commented, “Should Biden leave the race, we would not immediately change our electoral odds (60% Trump vs. 40% Biden/Dem). We could see a stalling out of the recent ‘Trump trade’ as the market reassesses the race, but we do not see a broader market reaction.”