U.S. futures remained steady on Wednesday morning as the results from Tuesday’s U.S. Midterm elections continued to roll in. Investors are expecting the election to result in a political deadlock, whereby power in the US Houses of Congress is divided among Republicans and Democrats, thereby making it more challenging to pass policies.
A divide in power in Congress has typically been favorable for stock markets in the past, particularly as standoffs assist to prevent more extreme policy shifts as the federal debt limit which could have significant financial implications.
Danni Hewson, a financial analyst at AJ Bell, warned that the markets currently find themselves in a “wait-and-see” mode, particularly since the results of the Midterms do not appear to be as clearcut as what many may have predicted.
“The fact that we didn’t see a Republican landslide as a lot of people had expected does now raise questions about whether or not the Democrats will maintain control of the Senate,” Hewson commented, adding, “You’re in a slightly different situation and it does look like the Biden Presidency has not been dealt a massive blow by these midterm elections.”
At 3:07 am ET, Dow e-minis were up 0.02% while S&P 500 e-minis were up 0.13% and Nasdaq 100 e-minis were up 0.41%. Since World War II, the S&P 500 has experienced gains in each 12-month period following the Midterm vote.