By Jamie McGeever
ORLANDO, Florida, Nov 4 (Reuters) – Investors put money to work on Wednesday, piling into stocks, bonds, non-dollar currencies and gold following historic US midterm elections that saw the Democrats win control of both houses of Congress from President Donald Trump’s Republican Party. The widespread bullishness was also fueled by a steep fall in global oil prices.
In my column today, I look at the part high inflation and the affordability crisis played in the US midterm elections, which ended in one of the biggest defeats for an incumbent Republican president in living memory.
Today’s Key Reads
• Democratic sweep adds new twist to markets’ Iran, AI, and debt worries
• Election stiffens the Fed’s guardrails, but independence risks remain
• US trade deficit narrows slightly in September; imports hit record high
• ECB rate hike looks nearly certain after inflation rises to three-year high
• Global central banks hit pause in October after September hiking spree
• Today’s Key Market Moves STOCKS: Japan -1.5%, China +2.3%. Europe +1.8%, UK +1%. Brazil +1%, snaps six-day losing streak. Nasdaq +1.4%, S&P 500 +1.6%, Dow +3%.SECTORS/SHARES: Nine sectors on the S&P 500 rise, two fall. Five sectors +3% or more, consumer discretionaries +4.2%. Energy -4.8%. Data center, defense shares fall. Big healthcare stocks post double-digit gains, but CVS -12.5%.FX: Dollar lowest since September 30. Emerging FX rallies, especially Mexican and Chilean pesos. Bitcoin +3% above $80,000.BONDS: German bund yield lowest in two months, 30-year gilt yield posts biggest fall since May, 10-year yield lowest since July. US yields down 3-7 bps across the curve.COMMODITIES/METALS: Oil tumbles, Brent, WTI -8%. Gold +3.5% back above $4,000/oz, best day since August 19.
Today’s Talking Points:
Gridlock, schmidlock
Wait, aren’t political gridlock and a “lame duck” president in Washington meant to be bad news for stock markets? Not if Wall Street’s whoosh on Wednesday is anything to go by. As news of the Democrats’ “clean sweep” hit the wires late on Tuesday night, Nasdaq futures were down as much as 2.5%. The tech-heavy index closed Wednesday up nearly 1.5%, and the Dow had its best day since April last year.
As it turns out, the certainty of knowing who controls what in Washington for the next two years is rather welcome. It offers a sense of predictability, and reduces the likelihood of more radical policies being implemented. If so, the political backdrop is calmer. Also, history shows market performance in the second year of a presidential term is often weak, so the bar for recovery after the midterms is low. Will this time be different?
