US Democrats are on course to sweep an “historic” midterms victory of both the House and the Senate, as voters rebuked president Donald Trump for his “broken promise” to bring prices down, according to experts.
The scale of the “stunning” win was beyond expectations, with Democratic victories in Republican strongholds such as Texas, South Carolina and Kansas, as voters vented anger at the Iran war, high prices and job insecurity.
Markets reacted sharply at first, with dollar and US stock futures sliding, while the tech-heavy Nasdaq fell about 2%, although it has since partly recovered.
Trump has indicated he is willing to work with Democrats but he has the power to veto proposals from the Senate and the House, with political gridlock likely.
Below, Trustnet rounds up the views of market commentators as the US political landscape shifted markedly overnight.
The swing against Republican candidates is historic
Stephen Jones, chief investment officer at Aegon Asset Management, said a “tsunami” has broken across the US electoral map overnight, with the Democrats on course to take control of both the House and Senate – the latter of which had been in doubt.
“That doubt vanished early on with a clean sweep of early wins in key state Senate races. The scale of the swing against Republican candidates and in favour of Democratic [ones] is historic,” he said.
“There is much anger and dissatisfaction being expressed here – against an unpopular war in Iran, against promises broken by government, against inflation, affordability, and insecurity of employment in a period of dramatic technological change. Answers to all these issues are not easy to find, but American voters clearly want a different set of people to try to find them.”
A rebuke to a broken promise
Kit Rees, investment strategist at Quilter, said last night was a “stunning night” in US politics, with voters showing their discontent with president Trump and the impact his Iran war is having on people’s finances.
“Trump was re-elected in 2024 on the promise to get prices down, and today’s result is a rebuke to that broken promise with prices at the pump and on the supermarket shelves remaining stubbornly high,” she said.
Markets were already “on edge” before the vote, she noted, but now investors will have to reassess the outlook for Trump's agenda. She said we are entering a period of volatile policy making and potential legislative gridlock, “with Trump likely to use his presidential veto regularly”.
Much depends on Trump's tone
David Roberts, head of fixed income at Nedgroup Investments, said the initial reactions to the Democratic victories were risk off, with global markets falling. He described this as “no surprise” – as was the quick partial reversal as markets digested the news.
Fears that Democrat control at local and national level may put a brake on AI infrastructure build out, which has been propelling US economic growth, may prove premature, but there is uncertainty ahead.
“Much depends on Trump's tone. So far, he’s been congratulatory and conciliatory toward Democrats suggesting an acceptance of results and willingness to work with them. If so, for markets it may be a case that the midterms are a case of ‘nothing to see here’. Or perhaps more accurately, less to fear than thought. Time will tell,” he said.
“What Trump does next, especially with Iran, is more important than US midterm results for global markets in the next few months.”
The result does not settle the outlook for markets
For Andrew Jackson, head of investments at Vontobel, the news reduces the administration’s ability to push its domestic agenda, meaning further fiscal spending is unlikely, which could temper growth.
“The first test will be whether the result leads to orderly negotiation or recurring confrontation over spending and the debt ceiling,” he said.
“Beyond that, we will watch whether the administration turns more towards tariffs, sanctions or other executive measures, and how earnings respond to growth and financial conditions. The election provides a clearer map of Washington. It does not, by itself, settle the outlook for markets.”
Lame duck Trump may focus on styling himself as a peacemaker
Holger Schmieding, chief economist at Berenberg, said the “lame duck” president remains commander in chief and could therefore look to use his influence on the international stage, as his domestic powers have been reduced.
“As a perennial attention seeker without a consistent long-term strategy, he may be even more eager to pursue dangerous geopolitical adventures,” he said.
He expected Trump to come under pressure from Republicans to get petrol prices back to normal by resolving the Iran issue, suggesting a deal could be on the cards, although Schmieding said there could be a final round of assaults before this takes place.
“For better or worse, a Trump deal would probably be closer to Iranian terms than the initial US and Israeli objectives. For the world, such a deal would probably be worse than the 2015 nuclear accord with Iran, which Trump had abandoned in his first term in 2018,” he said.
Similarly, Trump could try to pressure Ukraine to “de facto surrender” to Russia’s demands “to style himself as a peacemaker for the history books and to further his business interests”.
“Led by Germany, Europe would step up its support for Ukraine if need be. But it cannot fully replace the US intelligence, satellite access and interceptor missiles which Kyiv needs.”