US midterm election outcome could be marginally positive for markets
“In the sixth year of a president’s term, the president’s party typically loses – and often loses big”- By Libby Cantrill and Josh Thimons – PIMCO Viewpoints
Below summary of article written by Chris Walker
In the recent US midterm elections the Republicans gained a majority in the Senate and increased their existing majority in the House of Representatives. With now, a some 30-seat majority, it represents the largest Republican House majority since the Depression. However, while this may appear big trouble for Obama, the composition of the new Republicans will in fact be more centrist (i.e. less ‘Tea Party’).
Given these results, our view is that next year’s Congress will likely be incrementally more productive than that of recent years – though that would not be difficult as we are finishing the least productive session of Congress ever.
From a market perspective, we believe the election outcomes are marginally supportive for both equities and the US dollar, but they also increase, to some degree, the prospect of market volatility.
Historically speaking, the period following a midterm election has been generally favourable for equities and other risk assets. Since 1950, the S&P500 index has returned 15.8% on average in the year following midterm elections, with no instances of negative perform
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Frequently Asked Questions about this Article…
Historically, the period following US midterm elections has been favorable for equities and other risk assets. Since 1950, the S&P 500 index has averaged a 15.8% return in the year following midterm elections, with no instances of negative performance.
In the recent US midterm elections, the Republicans gained a majority in the Senate and increased their majority in the House of Representatives, achieving the largest Republican House majority since the Depression.
The recent US midterm election outcomes are seen as marginally supportive for equities and the US dollar, but they also increase the prospect of market volatility to some degree.
The new Republican majority is considered more centrist because it is composed of fewer 'Tea Party' members, suggesting a shift towards more moderate positions.
The new Congress is expected to be incrementally more productive than recent years, which is not difficult given that the current session is finishing as the least productive ever.
The recent election results might be seen as trouble for President Obama because the Republicans gained a significant majority, which could challenge his administration's policies.
The Republican House majority achieved in the recent elections is historically significant as it represents the largest Republican House majority since the Depression.
The composition of the new Congress, being more centrist, could lead to more productive legislative sessions, which may positively influence market outcomes by reducing uncertainty and fostering economic policies.
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