The stock market is set to open tomorrow amid speculation that President Joe Biden will not seek reelection, an announcement that is expected to trigger significant volatility.
The upcoming president is anticipated to contend with a serious debt issue that may result in a crisis, according to strategists. Biden’s decision will heighten economic uncertainty as Democrats rally around a prospective new candidate, with Biden reportedly endorsing Vice President Kamala Harris as the nominee.
Josh Thompson, CEO of Impact Health USA, remarked that an announcement of Biden’s withdrawal would likely provoke immediate volatility and uncertainty in the markets. Investors typically favor stability and predictability, and such a major political change could disrupt that.
This uncertainty could lead investors to flee to safe-haven assets such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic turmoil.
Additionally, the so-called “Trump Trade,” which has gained momentum since Donald Trump outperformed Biden in a debate and survived an assassination attempt, may also experience a slowdown. This term describes the market behavior and investor trading patterns in anticipation of a second Trump administration, during which Trump was perceived to be business-friendly. Sectors likely to benefit from a potential second term for Trump include healthcare, banking, cryptocurrency, oil stocks, Tesla, and Trump Media and Technology Group.
Ed Mills, a Washington policy analyst at Raymond James, indicated that while a Biden exit from the race could slow the recent “Trump trade,” he does not foresee a significant overall market response. He maintained the current electoral odds at 60% in favor of Trump and 40% for Biden or a Democratic candidate.