The stock market is expected to face heightened volatility when it opens tomorrow, following the announcement that President Joe Biden will not seek reelection. This development is likely to create economic uncertainty as Democrats quickly rally around Vice President Kamala Harris as their preferred candidate.
Josh Thompson, CEO of Impact Health USA, remarked that if Biden officially withdraws from the race, investors might react with nervousness due to their preference for stability and predictability—which could be jeopardized by such a significant political change.
In light of this uncertainty, investors may turn to safe-haven assets such as gold, silver, and the Swiss franc, as these tend to be less affected by political and economic turmoil.
Moreover, this shift could potentially lead to a slowdown of the “Trump Trade,” which has seen momentum since former President Donald Trump not only outperformed Biden in recent debates but also survived an assassination attempt. The Trump Trade encapsulates how investor behavior adjusts to the prospect of a second Trump administration. During his presidency, Trump was viewed as very favorable toward business interests, and a second term is expected to be beneficial for sectors like healthcare, banking, cryptocurrency, oil stocks, as well as companies like Tesla and the Trump Media and Technology Group.
Analyst Ed Mills from Raymond James shared insights that if Biden steps aside, it may not drastically alter electoral odds—currently at 60% for Trump versus 40% for Biden or another Democratic candidate. Although there may be a pause in the enthusiasm for the “Trump trade” as markets reevaluate the political landscape, Mills does not anticipate a significant wider market reaction.