US elections - this year's market rebound may be even greater

The US midterm elections will be held in four months, when US voters will go to the polls to elect the entire 435-seat House of Representatives, one-third of the 100-seat Senate, and two-thirds of governors from 50 states.

About the author

Ben Laidler - global markets strategist in eToro. Capital investment manager with 25 years of experience in the financial industry, incl. at JP Morgan, UBS and Rothschild, including over 10 years as the # 1 investment strategist in the Institutional Investor Survey. Ben was the CEO of the independent research firm Tower Hudson in London and previously Global Equity Strategist, Global Head of Sector Research and Head of Americas Research at HSBC in New York. He is a graduate of LSE and Cambridge University, and a member of the Institute of Investment Management & Research (AIIMR).

Political risk is increasing

Republicans appear to benefit from traditional anti-incumbent party sentiment, President Biden's low endorsement, and widespread fears of inflation, and polls show they will regain control of the House of Representatives while gaining control of the Senate with an easy victory in Congress. This is likely to create a further stalemate in US policy and increase political risk should the US fall into recession and it will be necessary to take two-party fiscal measures.

The months before the midterm elections tend to be unfavorable for the equity markets, but they are usually followed by some relief. This trend, traditional for this season, is in line with falling inflation and the end of interest rate increases FED (which - as we expect - will stimulate global markets), may now be intensified.