US Midterm Election Expectations

Over the last two weeks, Rivel Research Group surveyed 86 US buy-side and sell-side investment professionals regarding their expectations for the upcoming midterm congressional elections.

There appear to be two foregone conclusions – a) that a dual Republican win in both houses of Congress would be the best result for the equity markets and that b) this outcome is unlikely. The prevailing view is that control of Congress will be split between a Republican Senate and a Democratic House of Representatives.

Therefore, it is reasonable to assume that a major Republican victory would push the markets higher while a dual Democratic win would push them lower.

Interestingly, a sizeable minority (28%) believes a split Congress would be the most favorable scenario for equities reflecting long-held views among some that power-sharing helps one party rein in the excesses of another – ultimately benefitting economic policy and business conditions. Final results are presented below:

Q1. Which of the following election results do you believe would be best for the equity markets?

Q2. Which result do you believe is most likely to occur?

midterms