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What does the US midterm election mean for investors?

In a historically significant US midterm election, Democrats secured control of both the House and the Senate[1]. Their victory, which saw them flip at least seven Senate seats, including three in states held by Republicans for decades, is a clear rebuke to Trump’s policy[2]. The overall direction of US economic policy is unlikely to change significantly, however, as Trump retains the power to veto legislation passed by Congress and substantial authority over trade and foreign policy.

 

Limited economic impact but political confrontation

On fiscal policy, Trump already secured passage of his “One Big Beautiful Bill” in 2025, and its core provisions will remain in place. With control of Congress, Democrats could seek to soften cuts to Medicaid and SNAP, using negotiations over defence spending, federal funding, and future increases in the debt ceiling to extract concessions. Their ability to force legislative changes remains limited, however, as overriding a presidential veto requires a two-thirds majority in each chamber.

Regulation remains a key issue for banks, artificial intelligence, energy, and environmental standards. The administration can continue to ease regulatory requirements through executive action and federal agencies, subject to judicial review and heightened congressional scrutiny. For data centres, the main risks remain at the state and local levels, particularly those related to grid connections, electricity rates, permitting, and taxation. 

The election’s most significant consequences are likely to be institutional and political. By taking control of the House, Democrats can strengthen oversight of the administration by chairing House committees, holding hearings, and launching investigations into policy decisions and public spending. They can also initiate impeachment proceedings by a simple majority vote. Removal from office of Trump, however, remains highly unlikely, as conviction requires the support of two-thirds of senators present. Democratic control of the Senate gives them the power to block Trump’s nominees, including federal judges and, should any vacancies arise, Supreme Court justices or members of the Board of Governors of the Federal Reserve (Fed).

Ahead of the new Congress taking office in January, Trump could adopt a more interventionist approach and continue seeking ways to assert executive authority.

Key takeaways

  • Fiscal policy implications should be limited as President Donald Trump retains veto power, but the risk of a political confrontation has increased.

  • For technology, the regulatory risk sits mainly at state and local level. Demand and earnings remain strong.

  • Our asset allocation is unchanged. We stay positive on equities and see safe sovereign bonds as a more efficient hedge. A broader rally will also depend on de-escalation in Iran and lower energy prices.

A test for 2028 

Politically, the election leaves the future direction of both parties uncertain. The Republican defeat could weaken Trump’s political authority within the party, and some Republican elected officials might begin to distance themselves from him with an eye to 2028. Democrats, meanwhile, will need to manage their own internal divisions ahead of the 2028 elections, as their stunning victory reflects a forceful repudiation of Trump’s policies more than an endorsement of their agenda.

 

Asset Allocation unchanged

We remain positive on equities after the midterms. The Democratic sweep changes the political balance more than the economic outlook, and we see the regulatory risk for technology as manageable for now. With the election behind us, markets can refocus on fundamentals. The recent correction gives us room to rebuild our exposure to AI. The upcoming Anthropic IPO will be an important test of that move. Government bonds are once again working as a hedge, and a Democratic Senate able to block Fed nominations lowers the risk to central bank independence. Our equity exposure should become more broad-based if the Iran conflict de-escalates and energy prices and interest rates ease.

Technology remains a conviction

Some Democratic candidates have called for tighter restrictions on data centre development, including statewide moratoria.

Hyperscalers could face federal policy headwinds, but Trump still has veto power. Policy risks may be more pronounced at the state and municipal levels, where support for moratoria on new construction is growing. Nevertheless, we view the likelihood of widespread implementation as low as broader cost-of-living concerns are likely to take priority. Companies may also mitigate local restrictions by shifting development to other states.

With the US midterm elections behind us, attention can now return to fundamentals.

Despite concerns about elevated capital spending and negative free cash flow, demand remains robust, and IT earnings grew by more than 25%[3], again ahead of expectations. Following the recent share-price declines and some unwinding of crowded positions, we continue to see compelling opportunities in the technology sector.

[1] Source: Bloomberg on 04/11/2026
[2] Source: Bloomberg on 04/11/2026
[3] Source: Bloomberg on 04/11/2026

Analyses récentes

  • Les bénéfices au centre de l’attention

    La Fed a relevé ses taux alors que les investisseurs il y a quelques mois à peine anticipaient des baisses. Les marchés tablent désormais sur une poursuite du resserrement monétaire jusqu’en 2027, mais les actions américaines restent en hausse depuis le début de l’année. Les prévisions de bénéfices ont résisté au retournement des anticipations de politique monétaire. La saison des résultats du troisième trimestre permettra de vérifier si les entreprises sont en mesure de répondre à ces attentes.
  • Tropical beach surrounded by lush vegetation symbolizing portfolio diversification and resilience in a changing market environment

    Restez confiant. Continuez d’avancer.

    Le cycle mondial reprend encore son souffle. Le PMI mondial n’a progressé que marginalement en juin, restant compatible avec une croissance instantanée proche de 2,5 % au deuxième trimestre, contre un peu plus de 3 % avant le conflit avec l’Iran
  • Infrastructure numérique prenant en charge l’intelligence artificielle, le <i>cloud computing</i> et le traitement des données

    Rareté, rivalité et nouvelle logique d’allocation d’actifs

    Le passage d’un monde constitué de données « subjectives » à un monde fondé sur des données « objectives » est un changement durable de régime, alimenté par la rivalité géopolitique, la concurrence que représente l’IA et la rareté structurelle des ressources.
  • A scenic mountain valley viewed from a rocky hiking trail, with towering granite cliffs, dense evergreen forests, and a sunlit meadow below. The landscape is framed by trees under a clear blue sky.

    Insatiable

    La croissance ralentit. Les consommateurs se montrent plus sélectifs. Cependant, la demande d’actifs stratégiques continue de s’accélérer.
  • Ormuz, nous avons un problème. Vraiment ?

    Les marchés obligataires intègrent l’impact de la guerre en Iran. Mais ce n’est pas le cas des marchés actions. Cette divergence est devenue frappante le mois dernier. Après la phase de choc initiale, le conflit est entré dans un régime d’escalades successives, de désescalades partielles et de perturbations persistantes.
  • Escalade. Désescalade. Bis repetita.

    Les marchés financiers sont entrés dans un régime où l’escalade et la désescalade ne sont plus des événements isolés, mais font partie d’un schéma répétitif. Le conflit en Iran n’a pas connu une évolution linéaire ; il a traversé des périodes d’accélération suivies de pauses temporaires, chacune alimentant l’incertitude sans laisser entrevoir une résolution.

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