(CercleFinance.com) – Wall Street should open slightly higher on Tuesday at the start of a session that promises to be wait-and-see as the mid-term elections are being held in the United States today.
Half an hour before the opening, the ‘futures’ contracts on the major New York indices are advancing between 0.4% and 0.7%, announcing a start to the day in the green
Americans are called today to elect the 435 members of the House of Representatives, to renew 35 out of 100 senators and to vote for 36 out of 50 state governors.
If it seems clear that the Democrats are preparing to lose the House of Representatives, doubt still hangs over a Republican victory in the Senate.
Whatever happens, American investors seem relatively unconcerned about the outcome of the election: what they want above all is to have definitive and sure results when they wake up tomorrow morning.
“The midterm elections are unlikely to have a big impact on the markets,” notes Kristina Hooper, chief strategist at Invesco.
“Investors obviously tend to prefer a balance of power in government, so a divided Congress might be slightly more positive,” she points out.
A clear result could thus launch a new phase of rise, because the American midterm elections traditionally open a period of good performance for the markets, with an average gain of 14% during the 12 months following the vote.
“Historically, equity markets tend to be driven by midterm elections,” said Thomas Costerg, economist at Pictet Wealth Management.
‘But this effect fades if we only consider election periods during which the Fed is in rate-hike mode,’ he tempers.
Investors will also have to contend with other headwinds in the coming months, such as persistent inflation, slowing growth and weaker corporate earnings.
A cohabitation would also risk reviving the age-old disputes over the raising of the debt ceiling, which tends to worry Wall Street.
On the bond compartment, the yield on ten-year government bonds fell back below 4.20% after rising in recent days, due to expectations of further rate hikes by the Fed.
On the foreign exchange market, the beginning of the day is characterized by the continued rise of the euro, which has now reached the threshold of perfect parity against the dollar.
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