With four weeks to go until the vote, polls and prediction markets point to a divided government the most likely outcome, Goldman Sachs wrote in a note.
There is a 85% likelihood that Republicans gain control of the Senate, the House or both, and just a 15% likelihood that Democrats maintain unified legislative control.
Historically, a divided Congress has been more favourable for stocks as many investors believe it makes sweeping reforms less likely to pass, keeping the investment backdrop more stable.
"Equities
Equities
Equities can be defined as stocks or shares in a company that investors can buy or sell. For example, when you buy a stock, you are purchasing equity, thereby becoming a partial owner of shares in a specific company or fund.Equities do not pay a fixed interest rate, and as such are not considered guaranteed income. Consequently, equity markets are often associated with risk.When a company issues bonds, it’s taking loans from buyers. When a company offers shares, on the other hand, it’s selling p
Equities can be defined as stocks or shares in a company that investors can buy or sell. For example, when you buy a stock, you are purchasing equity, thereby becoming a partial owner of shares in a specific company or fund.Equities do not pay a fixed interest rate, and as such are not considered guaranteed income. Consequently, equity markets are often associated with risk.When a company issues bonds, it’s taking loans from buyers. When a company offers shares, on the other hand, it’s selling p
Read this Term typically perform well following midterms as political uncertainty declines," GS strategists said.
The S&P 500 has generated a median return of 3% through year-end and 17% during the 12 months following midterm elections, Goldman Sachs' analysis of the last 90 years showed.
"However, we believe the election outcome will rank low on the list of macro drivers of equity market returns," strategists added.
Full Reuters note
