The stock market is poised for a turbulent opening tomorrow following the news that President Joe Biden has opted out of running for reelection. This announcement is expected to heighten market volatility.
The political landscape will shift as Democrats rally behind a new candidate, with Vice President Kamala Harris receiving Biden’s endorsement for the nomination.
Josh Thompson, CEO of Impact Health USA, shared insights with Yahoo Finance over the weekend, stating, “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 political uncertainty may prompt investors to gravitate toward safer assets, such as gold, silver, and the Swiss franc, which tend to be less affected by fluctuations in political and economic environments.
Additionally, there may be a halt in the “Trump Trade,” which has gained momentum since former President Donald Trump outperformed Biden in a recent debate and survived an assassination attempt. The Trump Trade reflects how investors react to the potential of a second Trump administration. During his presidency, Trump was known for being pro-business, with healthcare, banking, cryptocurrency, and oil stocks, as well as Tesla and Trump Media and Technology Group, potentially benefiting from his return.
Raymond James Washington policy analyst Ed Mills noted last week in a communication to CNBC, “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 see a broader market reaction.”