The stock market is set to open tomorrow amid the news that President Joe Biden will not seek reelection, leading to anticipated volatility.
The announcement is likely to heighten economic uncertainty as Democrats quickly rally around a potential new candidate, with Biden reportedly endorsing Vice President Kamala Harris for the nomination.
Josh Thompson, CEO of Impact Health USA, expressed to Yahoo Finance that if Biden officially withdraws from the race, it would lead to immediate market volatility. Investors typically favor stability, and such a major political change could disrupt that.
This uncertainty might drive investors towards safe-haven assets, such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic upheavals.
Additionally, there could be a slowdown in the “Trump Trade,” which has gained traction since former President Donald Trump outperformed Biden in a debate and survived an assassination attempt. The “Trump Trade” describes how investors respond positively to the possibility of a second Trump administration. During his presidency, Trump was viewed as favorable to business interests, which could benefit various sectors, including healthcare, banking, cryptocurrency, oil, Tesla, and Trump Media and Technology Group.
Ed Mills, a policy analyst at Raymond James, noted in a recent correspondence with CNBC that while Biden’s withdrawal might not lead to an immediate adjustment in electoral odds, it could cause a slow down in the current “Trump trade” as the market reassesses the election landscape without seeing a broader market reaction.