Democrats take over the House and Senate and Trump suffers setback; investors fear political gridlock

The Democrats won, on Tuesday (Nov 3), command of the Senate and the House during the midterm votes, and with that President Donald Trump suffered a setback. According to InfoMoney, which cites Reuters, the news made investors consider the chance of a deadlock between the White House and the Legislature.

The victories also came in Republican strongholds, something that, according to Seu Dinheiro, had not happened for more than a generation. Tens of millions of voters cast ballots, and voters in conservative strongholds who had elected Trump two years ago switched to supporting Democrats, according to InfoMoney, based on Reuters.

For Your Money, the swing in the vote has three causes: the cost of living, the war conflict with Iran and Trump's governing style. The publication understands that the electorate reacted to the president's behavior in the first two years of his second term. On the night of the vote, estimates indicated that the opposition would take both Houses, according to Revista Oeste.

That same night of November 3, Trump told Fox News that he intends to veto the laws that the Democrats approve, according to Revista Oeste. The speech gains strength because, from 2027, the party will have a majority in the Chamber and the Senate, according to Your Money.

According to InfoMoney, citing Reuters, investors are taking into account the possibility of tougher regulations, higher taxes and reinforced surveillance on artificial intelligence and cryptocurrencies. In this context, the market sees it as plausible that the Trump administration and a Congress under Democratic control will hinder each other's agenda. On Nov 4, the world's main trading sessions alternated between highs and lows, also according to InfoMoney.

What changes for the investor

The central point for those who invest in the stock market, Nasdaq, interest rates and the dollar is the uncertainty about the rules. If the impasse is confirmed, the processing of proposals on taxes, regulation and inspection of technology and cryptocurrencies could be blocked, which keeps these issues open for longer. Companies listed in sectors such as artificial intelligence and crypto are those most likely to feel this effect, if discussions progress. The report does not project prices or suggest the purchase or sale of assets, and the real impact will depend on how the clash between the Executive and Legislative branches unfolds.

Automatically translated from Portuguese.