The outcome of the US mid-term elections was in line with market expectations with the Republicans retaining control of the Senate but losing control of the House in the largest swing to the Democrats in the popular vote since 1948.
Stock markets have taken the news positively. While a clean sweep by the Republicans might have meant more fiscal stimulus, a divided Congress reduces the risk of over-stimulation and a rapid rise in interest rates. With sentiment coming off an extremely depressed base after October’s volatility, investors are willing to see the glass as half full once more.
We think the rally will continue into the New Year, fuelled by continued strong growth in America and new stimulus measures in China, though we don't rule out a retest of the lows as that's quite normal after such a sharp decline in stock prices.
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About Royal London Asset Management (RLAM)
Established in 1988, Royal London Asset Management (RLAM) is one of the UK's leading fund management companies, providing investment management solutions to both wholesale and institutional clients such as not-for-profit organisations, local authorities and the insurance sector.
RLAM manages £117 billion of assets and employs 89 investment professionals. It invests in all major asset classes including UK and overseas equities, government bonds, investment grade and high yield corporate bonds, property and cash.
For professional clients only, not suitable for retail investors.
Issued November 2018 by Royal London Asset Management Limited, registered in England and Wales number 2244297; authorised and regulated by the Financial Conduct Authority. Registered Office: 55 Gracechurch Street, London, EC3V 0RL.
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