[Shangtou Morgan Market Comments] Multiple configurations are in line with US midterm elections "Foreshadowing"
US midterm elections were officially held on November 6 local time. The Democrats won the majority of the House of Representatives House of Representatives , and the Republicans had previously maintained control over the U.S. Senate. This election, which is regarded as the "midterm exam" of the Trump administration and the "outpost battle" of the 2020 presidential election, has attracted widespread attention from American voters and global investors. SPDB Morgan believes that the results of the midterm elections are unlikely to reverse the current U.S. business and monetary policy cycle, which is only a source of volatility in the short-term market; in addition, some institutional statistics show that, one year after the midterm elections, the average annualized return of S&P 500 is as high as 15.1%.
Regarding the impact of the results of the US midterm election on the global market, SPDB Morgan said that the election results are unlikely to bring about substantial changes in fiscal or regulatory policies, thereby reversing the U.S. business and monetary policy cycle. From this perspective, the midterm elections are only a source of market fluctuations at the weekly or monthly level, rather than the turning point of any major asset market, so investors don’t need to worry too much. It is worth noting that historical data show that U.S. stock volatility usually begins to rise several months before the midterm elections to reflect the uncertainty faced by the midterm elections; but within one year after the midterm elections, the S&P 500's average annualized return reached 15.1%, more than twice the average annualized return of 6.8% in the remaining years.
With the announcement of the results of the midterm election, the policy direction will become clearer. Against the backdrop of Trump's performance in stock market and US priority as political achievements, it is expected that future policies will still focus on supporting the momentum of US economic growth, but various types of assets may be affected by relevant policy differences. SPII Morgan recommends that investors can make more diversified and proactive and flexible management of diversified asset allocations through asset types, regions and styles to resist potential fluctuations.
(Editor in charge: Zhang Mingjiang)
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