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How will U.S. markets react to the midterms?

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U.S. stocks are likely to enjoy an impressive rally this week, as Republicans look set to take the Senate

On Tuesday, U.S. voters will elect representatives for all 435 seats in the House of Representatives and 35 seats in the Senate.

There are also a range of other positions like local governors and mayorships on the table.

Democrats may prepare for a watershed loss. However, investors are expecting a rally of U.S. markets.

Nigel Green from the deVere Group believes Republicans could take at least one chamber in these elections.

The deVere Group is one world’s largest independent financial advisory, asset management and fintech organisations.

“History teaches us that a sitting president’s party sheds some level of power during these elections, splitting the executive and legislative branches of the U.S. Government.”

“This typically results in gridlock as lawmakers are unable or unwilling to agree on major legislation, meaning that substantial laws are either not approved or significantly reduced in scope and impact,” Mr Green said.

U.S. President Joe Biden has urged people to vote Democrat amid rising inflation and cost of living pressures.

In September, the price of basic goods and services increased by 8.2 per cent when compared to the same time last year.

“This is not a referendum; this is a choice.  And the more people we get out to vote, we win. We win.”

JOE BIDEN, U.S. PRESIDENT

Mr Green said some sectors will be more impacted than others after Tuesday’s vote is complete.

“The status quo usually means that corporations can push on with their plans and investments without the risk of everything being upended by new laws and requirements.”

“Reforms to legislation on big tech can be expected to come to a halt due to the gridlock, which “represents upside for the tech stocks,” he explained.

Who is likely to be affected?

A Republican wave across the U.S. could be a win for major pharmaceutical and biotech stocks, which have already capitalised during the Covid-19 pandemic.

Democrats are pursuing a bill to lower prescription drug prices. Biden said the price of prescription drugs has been out of control for years.

“We pay the highest price for prescription drugs than anywhere in the world.”

“The prescription you have from a drug manufacturer in the United States you get at the local drugstore, you can get in a plane and fly to Paris, you can get the same exact drug for less—every other major capital in the world,” President Biden said.

A voter marks a ballot during the primary election and abortion referendum at a Wyandotte County polling station in Kansas City, Kansas, U.S. August 2, 2022. REUTERS/Eric Cox

Wall Street’s energy stocks could see gains if Republicans take either the House of Representatives or the Senate.

If this is the case, a Democrat-led windfall tax on oil producers could be blocked.

“I’ve released millions of barrels of oil from our Strategic Petroleum Reserve, keeping the price down. It’s down about $1.25 and going down,” the President said, as he conceded prices need to drop further.

The oil crisis has been spurred by the war in Ukraine, as major economies like the U.S. and Britain sanctioned Moscow for its so-called ‘special military operation’.

Russia is the world’s second largest producer of oil. However, the west’s sanctions have cut Moscow from the global supply chain, and sent oil prices skyrocketing.

In addition, the Organisation of Petroleum Exporting Countries and its allies (OPEC+), recently made the decision to cut its daily oil production by 2 million barrels.

The OPEC+ group is primarily run by Russia and Saudi Arabia. President Biden said “there will be consequences” over the recent decision.

The reduction has impacted around 2 per cent of global oil demand.

Oz Sultan is a former Republican candidate, who said U.S. markets will respond favourably if there is a sea of red on Tuesday.

“What we’ve seen from the Biden White House is an approach to green energy, which isn’t necessarily sensible.”

“A lot of what his [Biden’s] policy has been is too little too late, and it’s great thinking but if you don’t have sensible policy that affects the change that you want, it’s not going to happen.”

OZ SULTAN, FORMER REPUBLICAN CANDIDATE

Midterm elections have previously heralded positive stock market performances.

However, there are a suite of inflationary pressures and cascading events including the pandemic, conflict in Ukraine and global supply chain crunch, which investors are keeping a close eye on.

How can investors avoid the worst of it?

The U.S. President typically seeks to use the results of the midterms to boost the economy in the third year of their presidency, as part of their bid to get re-elected in the following year.

However, a divided government will make it harder for President Biden to pass his legislative agenda.

Mr Green from the deVere Group said investors should not underestimate the importance of a trusted investment strategy.

“Ensuring your portfolio is properly diversified is one of the fundamentals of successful investing.”

“Having a well-diversified portfolio across asset classes, sectors and regions means you are best-placed to mitigate risks and best-placed to take advantage of important opportunities.”

NIGEL GREEN, CEO OF THE DEVERE GROUP

The midterm report card is set to alter the course of U.S. domestic politics as the 2024 Presidential election looms large.

However, President Biden said there is also something else at stake: democracy itself. 
 
“I’m not the only one who sees it. Recent polls have shown that an overwhelming majority of Americans believe our democracy at—is at risk, that our democracy is under threat.”

“They too see that democracy is on the ballot this year, and they’re deeply concerned about it,” he said.

Costa is a news producer at ticker NEWS. He has previously worked as a regional journalist at the Southern Highlands Express newspaper. He also has several years' experience in the fire and emergency services sector, where he has worked with researchers, policymakers and local communities. He has also worked at the Seven Network during their Olympic Games coverage and in the ABC Melbourne newsroom. He also holds a Bachelor of Arts (Professional), with expertise in journalism, politics and international relations. His other interests include colonial legacies in the Pacific, counter-terrorism, aviation and travel.

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Money

Gen Z and millennials surpass boomers in voting power

Gen Z and Millennials outnumber Baby Boomers in Australian elections, signaling potential reforms in taxation and inheritance laws.

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Gen Z and Millennials outnumber Baby Boomers in Australian elections, signaling potential reforms in taxation and inheritance laws.


For the first time in history, Gen Z and Millennials now outnumber Baby Boomers at the ballot box in Australia, marking a seismic change in the country’s political landscape.

Experts say this electoral milestone could spark major reform debates on taxation, superannuation, and inheritance laws as younger voters prioritise different values.

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#AustraliaPolitics #GenZ #Millennials #Boomers #TaxReform #Superannuation #Inheritance #StevenEnticott #CIA #MoneyMatters #TickerNews

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Money

Stocks decline as tariffs and trade tensions escalate

Stocks drop as tariffs worry investors; gold hits record high; Canada resists U.S. annexation talk.

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Stocks drop as tariffs worry investors; gold hits record high; Canada resists U.S. annexation talk.

In Short:
Stock indexes declined on Tuesday after a nine-day winning streak, while gold prices soared amid economic concerns. Major companies like Ford and Mattel adjusted forecasts due to tariff impacts, and the trade deficit hit a record high of $140.5 billion.

Stock indexes fell on Tuesday, following declines in the Dow and S&P 500 after a nine-day winning streak.

Gold prices reached a new record as markets reacted to ongoing economic concerns.

The downturn persisted following a meeting between Canadian Prime Minister Mark Carney and President Trump, where Carney rejected any notion of Canada being for sale.

Investors showed continued apprehension about the impact of U.S. tariffs and the absence of new trade agreements, particularly as major companies like Ford and Mattel suspended annual guidance due to tariff uncertainties.

Ford impact

Ford, while less affected than competitors, estimated potential tariff impacts could reduce profits by $1.5 billion, prompting a 2.8% increase in its stock.

In contrast, Mattel’s stock rose by 2.6% after it signalled a potential increase in U.S. toy prices, anticipating a $270 million hit from tariffs, while also planning to move manufacturing from China.

Both WK Kellogg and Marriott International adjusted their financial forecasts downward due to tariff-related challenges and broader economic uncertainties.

Clorox shares fell sharply after the company updated its guidance to reflect tariff impacts.

Additionally, President Trump indicated he would announce the details regarding pharmaceutical tariffs within two weeks.

On a related note, new data revealed the trade deficit reached a record $140.5 billion in March, exceeding economists’ expectations and reflecting a surge in imports amid trade policy changes.

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Trump’s tariffs impact S&P 500 and Nasdaq markets

S&P 500 and Nasdaq decline amid Donald Trump’s new tariffs announcement, raising investor concerns ahead of Fed policy meeting.

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S&P 500 and Nasdaq decline amid Donald Trump’s new tariffs announcement, raising investor concerns ahead of Fed policy meeting.

In Short:
The S&P 500 and Nasdaq fell slightly after President Trump’s 100% tariff on foreign films, with investors worried about market effects ahead of the Federal Reserve’s policy decision. Despite some stocks performing well, overall market volatility and concerns over corporate profitability continue.

The S&P 500 and Nasdaq experienced slight declines on Monday following President Donald Trump’s announcement of a 100% tariff on foreign-produced movies.

Investors are assessing how this new tariff will impact the market ahead of the Federal Reserve’s monetary policy decision later this week.

The major indices have shown volatility since Trump initiated tariffs on April 2, briefly dropping 15% before recovering in the following sessions.

Treasury Secretary Scott Bessent expressed confidence that Trump’s tariff and tax agenda would stimulate long-term investments in the U.S., despite expected short-term market fluctuations.

Markets drop

The Dow Jones Industrial Average increased by 104.18 points, while the S&P 500 decreased by 9.60 points and Nasdaq fell by 39.60 points.

Despite Trump’s announcement, some media stocks showed resilience, while energy stocks suffered losses amid OPEC+ output hikes.

Investors await the Federal Reserve’s upcoming policy announcement, where rates are anticipated to remain unchanged, though future cuts are being priced in for 2025.

Corporate profitability concerns persist due to the new tariffs, evidenced by Tyson Foods’ significant revenue miss, while Skechers reported gains following its plan to go private.

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