The stock market is set to face significant volatility tomorrow amid reports that President Joe Biden will not seek reelection. This development could intensify economic uncertainties as Democrats strategize to support a new candidate, with Biden endorsing Vice President Kamala Harris as a potential nominee.
Josh Thompson, CEO of Impact Health USA, commented that if Biden officially withdraws from the race, the markets would likely respond with volatility and uncertainty. Investors typically favor stability, and such a major political change could disrupt that.
This uncertainty might lead investors towards safe-haven assets such as gold, silver, and the Swiss franc, which tend to be more resilient during times of political and economic turmoil.
Additionally, the so-called “Trump Trade,” which has gained momentum following Donald Trump’s strong performance in a recent debate and his survival of an assassination attempt, could stall. This term describes market behavior and investor strategies linked to the anticipation of a second Trump presidency. While Trump, a former real estate mogul, previously favored business interests during his presidency, many sectors including healthcare, finance, cryptocurrency, oil stocks, Tesla, and the Trump Media and Technology Group stand to benefit if he returns to office.
Ed Mills, a policy analyst at Raymond James, indicated that while the electoral odds (currently estimated at 60% for Trump and 40% for a Democratic candidate) would not be immediately adjusted if Biden exits, a reassessment of the race could pause the current momentum of the “Trump Trade” without triggering a major market reaction.