The stock market is set to react tomorrow to the announcement that President Joe Biden will not seek reelection, which is expected to create significant volatility.
As Democrats work to rally behind a new candidate, with Biden endorsing Vice President Kamala Harris as the nominee, economic uncertainty will take center stage.
Josh Thompson, CEO of Impact Health USA, stated, “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 uncertainty may drive investors towards safe-haven assets, such as gold, silver, and the Swiss franc, which tend to perform better during times of political and economic instability.
Additionally, the recent trend known as the “Trump Trade” could stall. This phenomenon has been gaining traction following former President Donald Trump’s strong performance in a debate against Biden and his survival of an assassination attempt. The “Trump Trade” reflects market behaviors linked to the prospects of a second Trump administration, with expectations that sectors like healthcare, banking, cryptocurrency, and oil, along with companies such as Tesla and Trump Media and Technology Group, would benefit.
Ed Mills, a policy analyst at Raymond James, indicated that while the electoral odds may remain unchanged at 60% for Trump and 40% for Biden or other Democrats, we might see a slowdown in the “Trump Trade” as the market reevaluates the electoral landscape. However, he does not anticipate a broader market reaction.