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'Welcome to gridlock': Stock traders cheer, dollar investors jeer US midterm results

US stocks set to gain, Chinese stocks and dollar slip, Europe stocks rally. "Trump may now fall back on policy areas that do not require Congress."

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  • Global markets are mixed on Wednesday after, as expected,
  • Democrats take control of the US House of Representatives, while the Republicans retain control of the senate.
  • This outcome could lead to "gridlock" with legislation harder to pass.
  • Chinese stocks suffered, with worries that the result could lead President Trump to double down on his trade war, which does not require Congressional support.
  • US stock futures are pointing to a higher open, with the Nasdaq set to rise about 1.2%.
  • European stocks are climbing higher.
  • One casualty of the results: The dollar, which dropped 0.4%. The Mexican peso is rallying.

Here's the markets scoreboard:

  • Nasdaq futures up 1.2%, S&P 500 up 0.7%, and the Dow is up 0.6%
  • The Shanghai Composite Index closed down 0.6%
  • The US dollar index is down 0.4%. The dollar is down 0.5% against the euro and is down 0.3% versus the yen. The Mexican peso is up 0.6% against the US dollar.
  • The benchmark Euro Stoxx 50 is up 1.3%. Britain's FTSE 100 is up 0.9% , and
  • Germany's DAX is up 0.9%
  • Gold was up 0.7%, while Brent oil fell slightly, 0.2% lower.

Donovan's view was issued by his colleagues in the chief investment office who note that an "increase in gridlock is likely, making it difficult to pass legislation."

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"Without common ground on areas to cut spending, the budget deficit is likely to remain higher than usual, keeping upward pressure on long-term government bond yields."

The prospect of gridlock seems to have impacted the US dollar, with the dollar index — which tracks the currency against a basket of its peers — dropping around 0.4%.

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