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After neck-and-neck election race, divided US government will be tonic for stock market

Rob Curran
Published Wed, Nov 9, 2022 · 07:00 PM

A DIVIDED American government will be a tonic for the stock market if the Republicans take control of the House of Representatives and keep the Senate deadlocked.

As of 7 pm on Wednesday (Singapore time), the Republicans were on their way towards winning control of the US House – but by smaller margins than forecast, with the Democrats gaining a Senate seat in Pennsylvania.

The Dow Jones Industrial Average added roughly 450 points on election day on Tuesday and is now about 10 per cent below all-time highs, as traders revel in the prospect of inaction from the federal government. Any hopes of tax, environmental or immigration reform will likely fall with the Democratic congress.

“Markets like gridlock. It means that not much can be done,” said Quincy Krosby, chief global strategist at brokerage LPL Financial. “Especially if the White House has what is considered to be a less-than favourable attitude regarding the business climate, it usually means they can’t push through the legislation that would be deemed negative …

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