On Tuesday the 6th of November from 0700 EST, the US public votes in the Mid Term elections. The subsequent result will be seen as an indication on how the ruling President is doing in regards to both popularity policies.  In addition, a huge amount is at stake, namely control of the House of Representatives and the Senate.  At this stage the Republican party controls both, but only by a very small margin.

Due to this control of both the House of Representatives and the Senate, the President managed to pass an astonishing 98.7% of bills: Certainly if my lifetime I have never seen US politics so fractured. Indeed I think both parties will use this as a catalyst to galvanise the US public into voting.

It’s likely the Democrats could win control of the House of Representatives: the outcome of this will mean it’s harder for the Republican party to change/amend any laws: On that basis I think the result would be a small, risk off sentiment to equities.  Conversely, if the Republicans remain in control of either the House of Representatives and/or the Senate I don’t think there will be any large move higher- or ‘relief rally’: I say relief rally not that I believe the Republican party is right or the correct party for the equities or positive market sentiment, but more on that investors and traders usually look for a stable, coherent and majority government when investing. The potential of further political wrangling with likely no possibility of bipartisan politics likely fills investors with trepidation in my experience.  In summary, I can’t see a move of greater 2% on any of the main US indices either way.

The above-mentioned market views and content reflect only the opinion of the author, not that of ayondo. This service is for informational purposes only and does not constitute advice or investment advice.

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