The stock market is set to open tomorrow amid speculation following President Joe Biden’s announcement that he will not seek reelection, leading to anticipated volatility.
This development introduces significant economic uncertainty as Democrats move quickly to rally support behind a new candidate, with Biden backing Vice President Kamala Harris for the nomination.
Josh Thompson, CEO of Impact Health USA, expressed to Yahoo Finance that if Biden were to announce his withdrawal, the market would likely experience immediate volatility and uncertainty. “Investors generally prefer stability and predictability, and such a significant political shift would disrupt both,” he stated.
In response to this uncertainty, investors may turn to safe-haven assets such as gold, silver, and the Swiss franc, which tend to be more resilient during periods of political and economic unpredictability.
Another factor to consider is the potential stall of the “Trump Trade,” which has gained momentum since former President Donald Trump, the Republican frontrunner, performed well in a recent debate and endured an assassination attempt.
The “Trump Trade” describes the market’s behavior in relation to the prospect of another Trump administration. Trump, known for his friendly stance towards business interests during his presidency, is anticipated to benefit stocks in sectors like healthcare, banking, cryptocurrency, oil, as well as Tesla and Trump Media and Technology Group.
Analyst Ed Mills from Raymond James noted that while Biden’s exit could stall the recent “Trump trade” as the market reassesses the political landscape, he does not foresee a significant broader market reaction at this time.