The stock market is anticipated to open tomorrow amidst significant news that President Joe Biden will not seek reelection, which is expected to trigger volatility.
This announcement elevates economic uncertainty as Democrats scramble to rally behind a new candidate, with Biden endorsing Vice President Kamala Harris as a potential nominee.
Josh Thompson, CEO of Impact Health USA, noted that if Biden were to confirm his withdrawal from the race, market reactions would likely be characterized by volatility and uncertainty. He emphasized that investors typically favor stability, and such a profound political change could disrupt this.
In light of the potential upheaval, investors might gravitate towards safe-haven assets like gold, silver, and the Swiss franc, which are traditionally viewed as more resilient during periods of political and economic instability.
Additionally, there may be a slowdown in what is termed the “Trump Trade,” which has gained momentum following former President Donald Trump’s strong performance in debates and his survival of an assassination attempt. The “Trump Trade” describes how market behaviors shift in response to expectations surrounding a potential second Trump administration. Trump has historically been favorable to business interests during his presidency, and sectors such as healthcare, banking, cryptocurrency, oil, Tesla, and Trump Media and Technology Group are seen as potential beneficiaries of his return.
Ed Mills, a policy analyst at Raymond James, indicated that despite Biden’s exit from the race, their electoral odds would remain unchanged at 60% for Trump and 40% for Biden or a Democratic nominee. Mills suggested that while there might be a pause in the recent “Trump trade,” he does not foresee significant broader market reactions.