Markets welcome calm after election result
Despite a brief setback for technology shares, markets appear to have reacted well to the outcome of the US mid-term elections. This is mainly because the result looks set to be accepted without political unrest.
Investors have had a busy week, with a series of company earnings reports followed by the US mid-term elections. The preliminary result points to a Democratic victory in both chambers of Congress. This briefly unsettled technology shares amid expectations of tighter regulation. Markets subsequently recovered, suggesting that the election result had already been priced in.
“What really matters to investors is not the election result itself, but the fact that Trump has accepted defeat and signalled that he will respect the result. This removes a great deal of uncertainty. Markets fundamentally dislike political uncertainty, and right now we do not appear to be facing a repeat of the unrest surrounding democracy itself that followed the 2020 presidential election,” says PFA’s chief strategist, Tine Choi Danielsen.
Democratic victory brings green optimism
Although the market reaction to the election has been limited, it is initially good news from a green perspective. Shares in the green sector appear to be rising. This can also be seen here in Denmark, where Ørsted and Vestas opened with solid gains on what looks set to be a positive day for shares.
“Judging by the preliminary reactions, it looks set to be a positive day for share markets in Denmark, Europe and the US. This shows that investors are above all relieved that a major source of political uncertainty has been removed. The focus can now shift back to what fundamentally drives markets: economic developments, interest rates, growth and company earnings,” says Tine Choi Danielsen.
Political deadlock can be good news
It is still unclear what a Democratic majority in Congress means for markets in the longer term. But according to PFA’s chief strategist, a political deadlock, with a Republican president and a Democratic Congress, is not necessarily bad news for markets. Quite the opposite.
“Political stalemate in Washington is not necessarily a bad thing in investors’ eyes. It makes major political changes harder to implement, and markets can actually welcome that predictability,” she says.
History also gives reason for optimism. The US S&P 500 share index has risen in all 20 instances since 1946 when returns are measured over the 12 months following a mid-term election. However, this is no guarantee of future performance.
PFA’s returns are still firmly in positive territory for the year
The election comes on top of an autumn of market volatility, partly due to tensions in Iran and fluctuating oil prices. Nevertheless, share markets remain above their levels at the start of the year.
“September, October and November have historically been among the more volatile months of the year, and that has held true in 2026. But the overall picture for the year remains positive. Shares have risen since the start of the year, and a typical PFA pension customer can be pleased with a solid return on their savings,” says Tine Choi Danielsen.