The stock market is expected to experience significant volatility tomorrow following the announcement that President Joe Biden will not seek reelection. This decision is likely to heighten economic uncertainty as the Democratic Party races to endorse a new candidate, with Biden reportedly backing Vice President Kamala Harris for the nomination.
Josh Thompson, CEO of Impact Health USA, commented that should Biden confirm his withdrawal, investors may react with uncertainty, preferring stability which may be disrupted by such a major political change. Consequently, this could steer investors towards safer assets like gold, silver, and the Swiss franc, which are typically more stable during times of political and economic turmoil.
Additionally, this news may impact the momentum of the “Trump Trade,” which has gained traction since former President Donald Trump’s debate performance against Biden and his recent survival of an assassination attempt. The “Trump Trade” reflects how market behaviors shift in anticipation of a potential Trump presidency, particularly benefiting sectors like healthcare, banking, cryptocurrency, and oil, as well as companies like Tesla and Trump Media and Technology Group.
Ed Mills, a Washington policy analyst from Raymond James, noted in a recent report that while the electoral odds might not change dramatically (currently estimated at 60% for Trump versus 40% for Biden or another Democrat), there could be a temporary slowdown in the “Trump Trade” as the market reevaluates the political landscape.