US mid-term election results are out

07 November 2018

The US has been one of the core drivers of global growth in the last few years, and this is in part why the mid-term elections were so important, not only to US citizens, but also to the world economy. Clearly, this is not guaranteed, and this must also be set against the backdrop of the tenth anniversary of the 2008 global financial crisis.

In its latest health check on the global economy, the International Monetary Fund (IMF) noted that trade wars are likely to hurt both the US and China. The IMF's World Economic Outlook for October 2018 may be viewed here: https://www.imf.org/en/Publications/WEO/Issues/2018/09/24/world-economic-outlook-october-2018

The US mid-term election results are out and make a little bit of a mixed read for President Donald Trump.

Prior to the mid-terms, the President, a Republican, had control of both houses within Congress (the House of Representatives and the Senate). Both houses have similar levels of power, in that both are required to give their assent if a bill is to pass into law.

Following the elections in November 2018, the loss of House of Representatives to the Democrats will be a blow to the President and may slow his planned progress during his term, but the extent of loss of seats (around 22 at the time of writing / source: Reuters) is not as high as some had first predicted.

On the morning of the results, with no dramatic outcomes from the US elections, the UK markets opened higher by approximately 1% in a largely positive reaction, although with the volatility of the last few months, there is no guarantee that this will last.

It is anticipated that the 'Trump bump' (the range of business stimuli injected into the US tax system to boost economic growth and employment), will continue into 2019; however, the effects of these stimuli may well be tailing off when the President reaches Super Tuesday, the US presidential election, on 03 November 2020.

No individual advice is provided during the course of this blog.

Keith Churchouse FPFS

Director

CFP Chartered FCSI

Chartered Financial Planner

Chapters Financial Limited is authorised and regulated by the Financial Conduct Authority, number 402899.