The stock market is expected to open tomorrow amid significant volatility following the announcement that President Joe Biden will not seek reelection. This decision is anticipated to bring economic uncertainty as Democrats rally behind a new candidate, with Biden endorsing Vice President Kamala Harris as the likely nominee.
Josh Thompson, CEO of Impact Health USA, expressed concerns regarding the immediate market reaction, stating that such a major political shift often leads to volatility and uncertainty. Investors typically favor stability, and the absence of Biden could disrupt that.
In light of this uncertainty, investors may gravitate towards safe-haven assets like gold, silver, and the Swiss franc, which are generally less affected by political and economic turmoil.
Additionally, there could be a temporary halt in the “Trump Trade,” a term that describes market behaviors influenced by expectations surrounding former President Donald Trump’s return to office. The Trump Trade has been gaining momentum since the former president’s strong debate performance and surviving an assassination attempt. Under Trump, businesses, particularly in healthcare, banking, cryptocurrency, and oil, along with companies like Tesla and the Trump Media and Technology Group, are expected to thrive.
Ed Mills, a policy analyst at Raymond James, noted that while Biden’s exit from the race may pause the current Trump Trade, he does not foresee a widespread market reaction, as the electoral odds remain at 60% for Trump compared to 40% for Biden or another Democrat.