US Elections: Modest market impact – Rabobank

In the US midterm elections, the Democrats won the House by a comfortable margin, while the Republicans expanded their control over the Senate on expected lines and the impact on the markets is relatively modest, points out the research team at Rabobank.

Key Quotes

“The popular-vote margin is estimated to be 7.5%-point in favour of the Democrats, the biggest gap since 2008 and somewhat higher than expected in the latest polls.”

“The Democrats faced a brutal map in the Senate and a heavily gerrymandered House. In any other election, a result like this would probably have been regarded a landslide.”

“It has now been confirmed that the Democrats have won 218 seats in the House of Representatives, while the Republicans have won 192. In the Senate, the respective results are 45-51.”

“A few interesting things to note are that Trump has done very well with his core voter base, while the Democrats were able to urge their supporters to vote, which is already a win by itself in mid-term elections.”

“The opposite results in the House and the Senate once again expose the deep cultural divide between those who live in big cities and suburbs and those who live in the rural, conservative areas. This sets the stage for a very interesting presidential race in 2020.”