-Source-Reuters-
Gridlock, Blue Sweep or Red Repeat? Wall Street is closely watching the U.S. midterm Congressional elections next week, as policy decisions that could sway the economy, corporate decision-making and consumer spending hinge on the results.
Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., October 30, 2018. REUTERS/Brendan McDermid
Should his fellow Republicans maintain or extend their grip on Congress, President Donald Trump may be emboldened to pursue more of his political agenda, including further tax reforms.
By contrast, Democratic gains that allow the party to control the House of Representatives, and possibly the Senate, could stifle Trump’s policy aims and perhaps lead to attempts to impeach him.
Investors are bracing for a split Congress, in which Democrats win the House but Republicans hold the Senate, a reflection of current polling data and online betting markets.
Sentiment could change though in the last week before the Nov. 6 elections and investors are quick to recall that Trump was losing in polls ahead of his surprise victory in the presidential election of 2016.
Midterm congressional elections “typically are not a major U.S. market event, let alone a global market event, but this time may be different,” Citigroup analysts wrote in a recent note.
Here is a look at how the election results could affect different asset classes:
A Democratic takeover of the House might spook the stock market because of concerns about political instability, including hearings involving the Trump administration.
But the fall in U.S. stock prices this month may be increasingly pricing in such a split Congress, so that scenario may not significantly shake the market. Read more
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