Investment Clock insights

RLAM’s Trevor Greetham on the US midterm elections


Trevor Greetham

8 November 2018

The outcome of the US mid-term elections was in line with market expectations, with the Republicans retaining control of the Senate but losing control of the House in the largest swing to the Democrats in the popular vote since 1948.
Stock markets have taken the news positively. While a clean sweep by the Republicans might have meant more fiscal stimulus, a divided Congress reduces the risk of over-stimulation and a rapid rise in interest rates. With sentiment coming off an extremely depressed base after October’s volatility, investors are willing to see the glass as half full once more. 
We think the rally will continue into the New Year, fuelled by continued strong growth in America and new stimulus measures in China, though we don't rule out a retest of the lows as that's quite normal after such a sharp decline in stock prices.

The outcome of the US midterm elections was in line with market expectations, with the Republicans retaining control of the Senate but losing control of the House in the largest swing to the Democrats in the popular vote since 1948.

Stock markets have taken the news positively. While a clean sweep by the Republicans might have meant more fiscal stimulus, a divided Congress reduces the risk of over-stimulation and a rapid rise in interest rates. With sentiment coming off an extremely depressed base after October’s volatility, investors are willing to see the glass as half full once more. 

We think the rally will continue into the New Year, fuelled by continued strong growth in America and new stimulus measures in China, though we don't rule out a retest of the lows as that's quite normal after such a sharp decline in stock prices.

Past performance is no guide to the future. The value of investments and the income from them is not guaranteed and may go down as well as up and investors may not get back the amount originally invested. The views expressed are the author’s own and do not constitute investment advice.