US elections and the impact of their results on the stock market

At the moment, the most discussed topic is the midterm elections to the United States Congress.

The situation is quite complex and according to most forecasts, as a result of these elections, Republicans have a fairly high chance of replacing Democrats in the House of Representatives and the Senate.

It is clear that such a change cannot but be reflected in the US stock and financial markets, and many investors are interested in the consequences of the ongoing elections.

What will happen if the Republicans nevertheless come to power in the United States, how will this fact affect the country’s economy and what consequences can be expected for the stock market?

Active steps to end the military conflict in Ukraine

It is no secret that the US Republican Party advocates for a reduction in military aid to Ukraine and a speedy end to the conflict.

This means that after gaining control of Congress, Republicans will not only cut aid funding, but also step up efforts to broker a ceasefire.

Such steps could lead to a reduction in purchases from arms manufacturers, which in turn would lead to a decline in production volumes and, consequently, profits. This would inevitably lead to a decline in the value of securities in this market segment on the stock exchange.  

Republicans' sphere of interest

In recent years, the Republican Party has been actively financed by companies in the IT sector, so it is quite easy to predict that after coming to power, senators will begin to actively return the money invested in them.

This will be expressed in preferences for companies in the high-tech sector, possibly a reduction in taxation in this area or additional subsidies for its development.

At the same time, economic programs actively funded by Democrats may be cut, the largest of which is support for green energy; Biden once promised to spend $2 trillion on green energy.

It won't be easy for pharmaceutical companies that actively sponsored Democrats in the 2020 presidential election; they are unlikely to be forgiven for their active support of their competitors.

The situation as a whole

Most analysts predict a slowdown in inflation in the United States after the Republican Party's victory in the Congressional elections.

This will have a positive impact on the country's economy as a whole and will positively impact the exchange rate of the US dollar, strengthening it even further against leading global currencies.   

All that remains is for us to wait for the final election results and observe the first steps of the winning party.