The stock market is set to open tomorrow amid news that President Joe Biden will not seek reelection, which is expected to trigger significant volatility.
Market strategist Josh Thompson, CEO of Impact Health USA, indicated that Biden’s withdrawal would likely lead to immediate fluctuations and uncertainty in the stock market. “Investors generally prefer stability and predictability, and such a significant political shift would disrupt both,” he remarked over the weekend.
This political uncertainty may lead investors to seek safe-haven assets such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic turmoil.
Furthermore, there may be a slowing down of the so-called “Trump Trade,” which has gained momentum in recent months as former President Donald Trump outperformed Biden in debates and survived an assassination attempt. The “Trump Trade” describes patterns in the market related to expectations of a second Trump administration, with certain sectors such as healthcare, banking, cryptocurrency, oil stocks, Tesla, and the Trump Media and Technology Group anticipated to benefit.
Despite the potential changes, analysts do not foresee an immediate shift in their electoral odds, which currently stand at 60% for Trump versus 40% for Biden or another Democratic candidate. Ed Mills, a Washington policy analyst for Raymond James, commented that while a withdrawal by Biden could cause a reassessment of the race, it would not lead to a broader market reaction.