0923 Wednesday 7 November 2018

After months of campaigning, the results are pretty much in…

In a very brief summary, the Democrats have won the House of Representatives for the first time since 2010 and the Republicans and maintained control of the Senate. Now if that hasn’t cleared everything up for you, let’s go a little deeper.

 (Courtesy of theguardian.com - Figures correct at time of publication)

(Courtesy of theguardian.com - Figures correct at time of publication)

The most significant piece of news is that by controlling the House, Democrats can make President Trump’s life more difficult both in terms of passing new legislation and also by having the ability to open investigations into his affairs, such as his dealings with Russia in the build up to the last Presidential elections.

Having a split congress can prove tricky for policies to be made or amended in the States, but this can be good news for Wall St. Historically, a gridlocked government is deemed as good for the US economy as division in political ranks makes it more difficult for Washington to stand in the way of the market. Going on historical data provided by Investors Business Daily, the best outcome for the S&P 500 is a split congress, which produces an 18.7% 2 year return, ahead of both other alternatives.

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Looking forward to today’s trading session, futures in the S&P, Dow and NASDAQ are all up, as are the majority of FAANG stocks in pre-market trading (Google is currently flat). The dollar by contrast is currently down in a majority of pairs.

As we all know, elections tend to cause volatility in the market and we learned that October was a brutal month for many US companies. Now traders will be pondering the markets next steps now that the midterms are out of the way. Will it be a return the longest running bull market that we saw earlier this year?

As always, to get a more in depth view of the midterms including market analysis, call one of our brokers on 0121 454 0770 or enter your details below and we will call you back.

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