The stock market is set to start tomorrow amidst the significant news that President Joe Biden will not seek reelection, which is anticipated to create market volatility.
This development brings economic uncertainty to the forefront as Democratic Party members hasten to unify behind a new candidate. Biden has endorsed Vice President Kamala Harris as his preferred nominee.
Josh Thompson, CEO of Impact Health USA, shared with Yahoo Finance over the weekend that the market would likely respond with volatility and uncertainty if Biden officially steps down from the reelection race. He noted that investors typically favor stability, and such a political change would disrupt that stability.
In response to potential uncertainty, investors might pivot towards safe-haven assets, including gold, silver, and the Swiss franc, which tend to be more stable during times of political and economic instability.
Additionally, there might be a halting of the so-called “Trump Trade,” which has gained momentum following former President Donald Trump’s strong performance in debates against Biden and a recent assassination attempt. This term describes market activities and investor behavior linked to the speculation of a second Trump administration. Trump’s presidency saw a favorable environment for business, with sectors such as healthcare, banking, cryptocurrency, oil stocks, Tesla, and Trump Media and Technology Group projected to benefit again.
Ed Mills, a policy analyst at Raymond James, indicated that even if Biden leaves the race, they would not immediately alter their electoral odds, currently at 60% for Trump and 40% for Biden or another Democrat. Mills suggested that while there may be a pause in the “Trump trade” as the market reevaluates the political landscape, a widespread market reaction is not anticipated.