US midterms: What history says about sharemarket returns in 2027

Résumé détaillé

Tuesday, November 3, was a historic night in US politics, with a resounding victory for the Democrats in the midterm elections. The outcome was expected, but few thought the…

Historically, the post-midterms period has traditionally been a strong one for US shares, writes Mark Lister. Photo / Getty

Tuesday, November 3, was a historic night in US politics, with a resounding victory for the Democrats in the midterm elections.

The outcome was expected, but few thought the winning margins would be as strong as they were.

There was a very positive market reaction the following day, followed by an equally dramatic sell-off on day two.

Let’s take a step back from the daily swings and consider how markets usually react to midterm elections.

The midterm year is often a weak part of the four-year presidential cycle for the sharemarket.

Uncertainty is high heading into this period and investors will often respond positively to the outcome, simply because they know where they stand.

It’s also common for the President’s party to lose support in midterm elections, which usually means a divided government.

Markets often welcome gridlock, as it reduces the likelihood of major policy changes.

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