Investors are bracing to see if the Democrats win control of the House of Representatives, and rein in Donald Trump’s tax cuts and deregulation

As Donald Trump never tires of pointing out, the US stock market has surged by around 40% since his shock election win two years ago.

That’s largely due to the tax cuts which the president pushed through last year, which boosted company profits. That’s catnip to Wall Street (other Trump policies, such as his anti-immigration rhetoric, don’t move the markets)

Dollar bulls are looking for a Republican win, which will supportive of more of Trump’s expansionary fiscal policies being pushed through. A Democrat win, and the resultant political deadlock is considered more bearish for the US dollar and US equities although we expect this to be a short-term reaction.

The unexpected result of a blue wave with Democrats taking both the Senate and the House would likely shock the markets resulting in an aggressive selloff in the greenback and US equities.

@Nate_McMurray When the #GOP brags about how great the economy is since they took control under Trump, please take another look. Who couldn’t stimulate the stock market with a $1.9 trillion deficit?? Check out Obama’s Dow Jones record after inheriting the great recession. pic.twitter.com/xJoCuh4EPr

Subdued trading this morning has seen London’s main stock index, the FTSE 100, dip into the red

It’s accompanied by most other European markets, as traders ponder whether today’s US elections will embolden or restrict president Trump.

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Author: Graeme Wearden