The stock market is poised for a tumultuous opening tomorrow following the announcement that President Joe Biden will not pursue reelection. This decision is expected to create significant volatility and economic uncertainty as the Democratic Party rushes to support a new candidate, with Biden endorsing Vice President Kamala Harris as his preferred nominee.
Josh Thompson, CEO of Impact Health USA, remarked that the market is likely to react with volatility and uncertainty to Biden’s withdrawal. He noted that investors typically favor stable and predictable environments, and such a major political change could disrupt that.
In light of this uncertainty, investors may increasingly turn to safe-haven assets like gold, silver, and the Swiss franc, which tend to be less affected by political and economic turmoil.
Additionally, there may be a slowdown in the trend known as the “Trump Trade,” which has gained momentum since former President Donald Trump showcased strong performance in debates and survived an assassination attempt. The Trump Trade reflects market reactions influenced by the prospect of a second Trump administration, known for being business-friendly during his presidency. Key sectors expected to benefit from a second Trump term include healthcare, banking, cryptocurrency, oil, Tesla, and Trump Media and Technology Group.
Ed Mills, a Washington policy analyst at Raymond James, stated that if Biden were to exit the race, they would not immediately modify their electoral predictions, currently estimated at 60% likelihood for Trump versus 40% for Biden or a Democratic alternative. Mills suggested that while the recent Trump trade might stall as the market evaluates the political landscape, he does not foresee a significant broader market impact.