The stock market is set to experience volatility tomorrow following the announcement that President Joe Biden will not seek reelection. This development could bring economic uncertainty to the surface as Democrats rally behind a new candidate, with Biden endorsing Vice President Kamala Harris as a potential nominee.
Josh Thompson, CEO of Impact Health USA, commented that a withdrawal by Biden would likely lead to immediate market fluctuations. He noted that investors generally favor stability and predictability, and such a significant change in the political landscape would disrupt that stability.
In light of this uncertainty, investors may gravitate towards safe-haven assets such as gold, silver, and the Swiss franc, which typically remain more stable amidst political and economic fluctuations.
Additionally, this situation could impact the so-called “Trump Trade,” which has been gaining traction since former President Donald Trump outperformed Biden in a recent debate and survived an assassination attempt. The Trump Trade reflects market behaviors and investor trading patterns influenced by the prospect of a second Trump administration. Stocks in sectors such as healthcare, banking, cryptocurrency, oil, Tesla, and Trump Media and Technology Group are anticipated to benefit should Trump regain the presidency.
Raymond James Washington policy analyst Ed Mills stated that even if Biden were to exit the race, he would not alter the electoral odds, currently estimated at 60% for Trump versus 40% for Biden or another Democratic candidate. Mills suggested that while there might be a pause in the momentum of the “Trump trade” as the market reassesses the political landscape, a broader market reaction is not expected.