Home » U.S. Republicans win the House of Representatives, the Senate count is underway! Experts warn against chasing provider FX678 if U.S. stocks rebound

U.S. Republicans win the House of Representatives, the Senate count is underway! Experts warn against chasing provider FX678 if U.S. stocks rebound

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U.S. Republicans win the House of Representatives, the Senate count is underway! Experts warn against chasing provider FX678 if U.S. stocks rebound
U.S. Republicans win the House of Representatives, the Senate count is underway!Experts warn against chasing gains if U.S. stocks rebound

On November 8, local time, the results of the US mid-term elections are gradually being announced. The US Republican Party won the House of Representatives and the Senate is still counting votes. RBC economist Lori Calvasina said a Republican victory in both the House and Senate would have a bigger impact on U.S. stocks. According to Tom Essaye, founder of Sevens Report Research, if Republicans can control the House or both chambers, U.S. stocks are expected to rebound modestly. However, the key to whether US stocks can continue to rebound is still the decline in CPI and the adjustment of the Federal Reserve, so any rebound should not be chased.

Republicans take the House of Representatives

The latest information on the US midterm elections is as follows (as of 14:23 on November 9, Beijing time):

In the race for Senate seats, Republicans won 17, Democrats won 11, and votes are still open

There are 435 votes in the House of Representatives, with 218 votes to win.Democrats got 216 votes, Republicans got 219 votes, has won the House

If Republicans can control the House or both chambers, US stocks are expected to rebound moderately

Tom Essaye, founder of Sevens Report Research, said in a report on Tuesday,If Congress is divided and Republicans win the House, but the Senate remains in Democratic control, U.S. stocks could lead to a “moderate rebound.” He predicted that the same outcome would likely be achieved if the Republicans prevailed in both chambers.

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He wrote: “The market generally favors decentralization because it reduces policy risks from tax hikes, but this is especially true now that any increase in spending could fuel inflation and push up interest rates. If Republicans control the House of Without control of the Senate, a divided government removes that risk, which the market may accept with a modest rebound.”

“We expect U.S. equities to rise across the board, but not substantially,” he said. In this scenario, tech stocks could outperform in the short term, bouncing back from oversold conditions. U.S. Treasury yields and the ICE U.S. dollar index should edge lower, while commodities could see a slight rebound.

RBC economist Lori Calvasina said,A Republican victory in both the Senate and the House of Representatives will have a greater impact on the U.S. stock market.Because the Republicans’ chances of taking back the Senate are widely seen as lower than their chances of taking back the House.

“We also think that if the Republicans take back control of the House and Senate, stock market participants will see that as a good omen for the Republicans heading into the 2024 presidential race,” she said. If 2022 is a wave for the Republicans election, then we think the bigger the wave, the bigger the impact on the U.S. stock market in the short term and possibly next year.”

But Tom Essaye, founder of Sevens Report Research, believes that if Republicans win both the House and Senate, he expects the market to react nearly identically to Republicans winning only the House, because winning the Senate would not make any practical difference.

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He wrote that for the Republicans to achieve a landslide victory, the segment would need a two-thirds majority in both the House and Senate to be substantial, and the odds of that happening are all but nil.

He also said that if Democrats succeed in blocking Republicans in both the House and Senate, the U.S. stock market reaction could be a “moderate decline.”A broad decline in U.S. stocks is likely to be led by technology and high-growth sectors, while U.S. Treasury yields are likely to rise modestly and the dollar index will rebound, weighing on commodities.

On top of that, the U.S. election is unlikely to be a game-changer for U.S. stocks, which are still deeply in a bear market, Essaye wrote.He believes that the key to the market’s real sustained rebound is still the decline in CPI and the adjustment of the Fed (not in the short term).Therefore, any market rally from this outcome should not be chased

S&P 500 daily chart

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