The stock market is poised for a tumultuous day tomorrow following the announcement that President Joe Biden will not seek reelection, which is expected to create significant volatility.
In light of this decision, economic uncertainty is likely to rise as Democrats quickly rally around a new candidate, with Biden endorsing Vice President Kamala Harris as the preferred nominee.
Josh Thompson, CEO of Impact Health USA, commented, “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.”
This impending uncertainty may drive investors towards safe-haven assets like gold, silver, and the Swiss franc, which tend to be more resistant to political and economic turmoil.
Additionally, there may be a slowdown in what is known as 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 reflects market behavior driven by the anticipation of a second Trump administration. During his presidency, Trump was perceived as favorable to business interests, benefiting sectors such as healthcare, banking, cryptocurrency, oil, Tesla, and Trump Media and Technology Group.
Raymond James Washington policy analyst Ed Mills noted, “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.”