The stock market is set to react tomorrow to the announcement that President Joe Biden will not seek reelection, with volatility likely on the horizon.
A recent poll by Coinbase indicates that Donald Trump and Kamala Harris are in a tight race for support among crypto voters. Biden’s decision introduces a new level of economic uncertainty as Democrats quickly rally around a potential new candidate, with Biden endorsing Vice President Harris as his preferred successor.
Josh Thompson, CEO of Impact Health USA, commented over the weekend, “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 encourage investors to seek safe-haven assets such as gold, silver, and the Swiss franc, which typically fare better during times of political and economic turmoil.
Additionally, the dynamics of the “Trump Trade” may shift as well. This term refers to market behavior reflecting investors’ expectations of a second Trump administration, which has gained momentum following Trump’s strong debate performance and a recent assassination attempt.
During his presidency, Trump was viewed as pro-business, which benefited sectors like healthcare, banking, cryptocurrency, and oil, as well as companies like Tesla and Trump Media and Technology Group.
Ed Mills, a policy analyst at Raymond James, noted, “Should Biden leave the race, we would not immediately change our electoral odds (60% Trump vs. 40% Biden/Dem). We could see a stalling out of the recent ‘Trump trade’ as the market reassesses the race, but we do not foresee a broader market reaction.”