The stock market is set to react tomorrow to the announcement that President Joe Biden will not seek reelection, which is expected to trigger significant volatility.
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The news about Biden’s decision is likely to create economic uncertainty as Democrats quickly mobilize to support a new candidate, with Biden having endorsed Vice President Kamala Harris as the likely nominee.
Josh Thompson, CEO of Impact Health USA, remarked on Yahoo Finance that if Biden announces his exit from the race, the market will likely experience immediate volatility and uncertainty. He emphasized that investors typically favor stability, and any major political change could disrupt that stability.
This uncertainty may lead investors to seek refuge in safe-haven assets such as gold, silver, and the Swiss franc, which tend to be more stable during times of political and economic turbulence.
Additionally, there could be a slowdown in the so-called “Trump Trade,” which has been gaining momentum since former President Donald Trump outperformed Biden in a recent debate and survived an assassination attempt.
The “Trump Trade” refers to market dynamics and investor behavior driven by the prospect of another Trump presidency. Trump’s tenure was marked by policies that favored business interests, and healthcare, banking, cryptocurrency, oil stocks, and companies like Tesla and Trump Media and Technology Group are anticipated to benefit from a potential second term.
Raymond James Washington policy analyst Ed Mills indicated in a note to CNBC last week that while Biden’s exit from the race may lead to a reassessment of the electoral landscape, they do not foresee a significant overall market reaction at this time, maintaining a 60% likelihood for Trump versus 40% for Biden or another Democrat.