The stock market is set to face a turbulent opening tomorrow following the announcement that President Joe Biden will not seek reelection, a decision expected to create considerable volatility.
The political landscape is shifting as Democrats unite to support a new candidate, with Biden backing Vice President Kamala Harris as the potential nominee.
According to Josh Thompson, CEO of Impact Health USA, the market is likely to react with volatility and uncertainty to this significant political change. “Investors generally prefer stability and predictability,” Thompson noted, emphasizing that such a major shift would disrupt the status quo.
This uncertainty could lead investors to seek refuge in safe-haven assets such as gold, silver, and the Swiss franc, which typically fare better during times of political and economic turmoil.
Additionally, the so-called “Trump Trade,” which has gained momentum since former President Donald Trump’s strong performance in recent debates and a survived assassination attempt, may face challenges. This trade reflects how the market responds to the prospect of another Trump administration, which is viewed as favorable for sectors like healthcare, banking, cryptocurrency, oil stocks, Tesla, and Trump Media and Technology Group.
Ed Mills, a Washington policy analyst at Raymond James, indicated in a note to CNBC that while Biden’s withdrawal could stall the current “Trump trade,” they do not foresee a major market reaction immediately. Mills stated they would maintain the electoral odds at 60% for Trump against 40% for Biden or the Democrats.