Result
Democrats won majorities in both the House of Representatives and the Senate, by margins larger than expected. The new Congress sits from 3 January 2027.
Market reaction
US equity futures fell overnight, then reversed. On 4 November the S&P 500 closed up 1.6% and the Dow Jones up 3.0%. The Nasdaq was flat over the two days. Tesla and SpaceX fell 3–4%.
US dollar index: down about 0.4%, from close to a six-month high.
10-year US Treasury yield: down about 0.07 percentage points to 4.88%, against its recent upward trend.
Brent crude oil: below USD 95, from about USD 118 on 30 October, on a higher likelihood of a diplomatic resolution with Iran.
Gold: up about 3%, consistent with lower interest rates.
NJR Partners view
Centrist majority. The larger House majority reduces the influence of the party's progressive wing. A more centrist majority is favourable for markets.
Gridlock. The Senate majority is short of the 60 votes needed to pass most legislation, and the President retains the veto. Limited legislative change over the next two years is favourable for markets; historically, a Republican President with a Democratic Congress has coincided with good returns from equities and bonds (Societe Generale, cited by Bloomberg's John Authers).
Inflation and the Federal Reserve. Policies that risk higher inflation are less likely. Senate approval of Federal Reserve appointments limits the risk to the Federal Reserve's independence.
Executive action. The administration is expected to use its executive powers to advance its agenda before January and through to 2028. Morgan Stanley expects merger and acquisition activity to rise early in 2027.
Congressional investigations and litigation are expected to increase, with limited effect on policy.
AI and data centres. Goldman Sachs expects temporary pauses on new data centre projects in Texas, Georgia and Michigan, states it estimates hold about 45% of planned US capacity, and expects the pauses to be short-lived. Semiconductor companies and data centre developers fell on the day.
Risks. The 2028 contest is more open on both sides, and positioning for it is expected to intensify from late 2027.
General information and market commentary only. It is not financial product advice and does not take into account any person's objectives, financial situation or needs. NJR Partners provides financial services to wholesale clients only. N. J. Renton & Partners Capital Pty Limited, AFSL 337724.