Making sense of this crazy world
A changing of the guard
The Democrats take both the Senate and the House of Representatives in what turned out to be a devastating defeat for Trump and the Republicans.
Already we are seeing fractures within the Republican Party as the ‘blame game’ gets underway.
The markets powered forward, but it’s the more traditional companies that saw their share prices surge. The Nasdaq rose too, but the performance of the index masks the serious concerns around the extent of the AI rollout, with data centre infrastructure development, for one, now expected to slow. However, on Thursday, the Nasdaq posted its biggest one-day fall since the pandemic at 5.52% as equity markets sold off around the world as the reality of a Democratic sweep sank in.
The Sustainable sector, though, received a shot in the arm as Trump is seen as anti-environmental with his emphasis on fossil fuels, but it wasn’t immune from yesterday’s sell-off.
This week’s commentary is focused on the result of the US midterms, the outlook for the US economy and the market response. For more in-depth information, I urge you to come along to our seminar on Wednesday and listen to Chris Jefferey from Legal and General Investment Management, who will provide insight into the considerations and implications for how all our investments and pensions should be positioned. It will also be useful that a week will have passed, and we should have a clearer runway as to what’s likely to unfold.
However, a quick nod to interest rates rising in the UK by 0.25%, with the Monetary Policy Committee voting 8-1 in favour. No surprise!
This week’s content:
- A blue wall
- The blame game
- Wall Street enjoyed its biggest daily rise in months, and then…
- The oil price tumbled 9%
- The outlook for markets
- Conclusion
A blue wall
As results started to filter through, US stock market futures were pointing to losses initially, but as it became clear that a blue wall was materialising and the result was going to be cut and dry, the expectation that Trump was going to question the legitimacy of the results diminished.
Democrats emerged from their sweeping US midterm victories buoyed by the scale of their success and determined to preserve their political momentum. “We’ve got work to do in Congress to maintain our trust with the American people,” Ken Martin, the Chair of the Democratic National Committee, told the FT on Wednesday. “Candidates matter, the mood of the electorate matters. This should be a massive warning sign to Republicans and a massive opportunity for Democrats. We’ve got new territory that we can compete in if we’re willing to do it,” he added. Democratic candidates were able to win races in traditionally conservative areas in rural and southern states from Texas to Kansas and South Carolina, which was won by paediatrician Annie Andrews, that had seemed out of reach for the party for decades.
Continues…
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