Katie Martin Published November 4 2026 Jump to comments section Print this page Unlock the White House Watch newsletter for free Your guide to what Trump's second term means for Washington, business and the world Thumping wins for the Democratic Party in Tuesday's US midterm elections open up a path back to something resembling normal life for investors. For years now, money managers have grown accustomed to all sorts of horrors: an on-again-off-again war that has fired up inflation; assaults on the integrity of the markets' most treasured institutions, chiefly the Federal Reserve; and the gaudy spectacle of a self-enriching president blowing up international alliances and picking corporate winners and losers. You can't necessarily point to the line item in a company's earnings report or flicker in its share price chart where these injuries occurred. But aside from the Donald Trump cheerleaders, everyone understood his agenda as undermining the predictable fair play that supports long-term investments. Now we have a clobbering that the president is not seeking to bluster or dispute his way out of. The end is in sight. "We have got to get some of the randomness out of the equation," as Michael Strobaek, chief investment officer at private bank Lombard Odier, put it on Wednesday. Enhanced checks and balances mean "the Republicans and Trump will be extremely careful what they do in the next two years", he said. Stocks did wobble in overnight trading as the results trickled out. But it is rarely worth placing too much emphasis on flighty price movements in quiet moments of the global trading day. Since then, stocks have picked up markedly. Still, market enthusiasm may yet be curbed by the risks that lie ahead under the new-look Congress. One is the chance that the new Democratic majorities could point to government shutdowns ahead. Another is the possibility that newly elected officials at the federal and state level could throw up powerful opposition to data centres -- a helpful moderation on AI excesses perhaps, but also a major potential banana skin in the race for AI infrastructure. Goldman Sachs reckons Democratic wins "are likely to lead to short-term data centre moratoria, potentially affecting about 45 per cent of planned US data centre capacity buildout". Those moratoria may indeed prove to be brief. But widespread protracted blockages in this pipeline are a risk that keep corporate bond investors, in particular, up at night. Investors have also told me recently they worry that a humiliated Trump could lash out in foreign policy in unpredictable and damaging ways over the next two years, or even seek to punish foreign investors for the perceived sins of their governments. For now, though, these appear to be distant tail risks. "The combination of a large Democratic majority in Congress and President Trump's statement that he is willing to work with the opposition should act as a brake on extreme policy outcomes and bring down risk premia," said George Saravelos, an analyst at Deutsche Bank. "The market is increasingly likely to interpret surprising policy shifts from the executive as time-bound by the next presidential election or the new domestic political configuration."
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Source: Financial Times Markets · Summarized by HeadlinesBriefing