The stock market is set to react tomorrow to the announcement that President Joe Biden will not seek reelection, which is expected to trigger significant volatility.
This decision places economic uncertainty in the spotlight as Democrats scramble to rally behind a new candidate, with Biden endorsing Vice President Kamala Harris as his successor.
Josh Thompson, CEO of Impact Health USA, commented over the weekend that if Biden announces his withdrawal from the race, it would likely lead to immediate market volatility. “Investors generally prefer stability and predictability, and such a significant political shift would disrupt both,” he explained.
In light of this uncertainty, investors may turn to safe-haven assets such as gold, silver, and the Swiss franc, which tend to be less sensitive to political and economic instability.
The market may also witness a slowdown in the “Trump Trade,” a trend that has gained traction following former President Donald Trump’s strong performance in debates and recent events. The “Trump Trade” reflects investor behaviors connected to the potential implications of a second Trump presidency. Trump, who is viewed as pro-business, is expected to positively impact sectors such as healthcare, banking, cryptocurrency, and oil stocks, along with companies like Tesla and Trump Media and Technology Group.
Raymond James policy analyst Ed Mills shared insights with CNBC, noting that if Biden exits the race, they would not immediately adjust their electoral predictions (60% Trump versus 40% Biden/Dem). Mills suggested there could be a temporary halt in the popularity of the “Trump Trade” as the market recalibrates, but he does not foresee a widespread market reaction.