With Americans heading to the polls on Tuesday 3 November, we wanted to share our perspective on the US midterm elections and what they could mean for your investments. Elections inevitably attract a great deal of media attention, and it is natural to wonder whether the result could unsettle markets. Our view, in short, is that the most likely outcome is political gridlock in Washington — more of the same, for now — and that this is not a reason for long-term investors to change course.
What are the midterms?
Halfway through a president’s four-year term, Americans elect the whole House of Representatives and around a third of the Senate. President Trump is not on the ballot, but the result decides which party controls Congress, and with it how easily the White House can pass new laws, set budgets and make key appointments. Both chambers are currently held by the Republicans. Because the US makes up the largest share of global stock markets, and features in most portfolios through global and US funds, what happens in Washington matters to UK investors too.
What are the polls telling us?
The House: history is against the President’s party, which has lost House seats in 20 of the last 23 midterm elections, losing 27 seats on average. The Republicans start with only a narrow majority, and President Trump’s approval ratings have fallen as the Middle East conflict has pushed up fuel prices and borrowing costs, while concerns over healthcare and immigration enforcement have also weighed. Polls and prediction markets point to the Democrats taking the House.
The Senate: this is a much closer race. Most of the 35 seats being contested are considered safe, so the outcome will come down to a handful of competitive states. The Democrats need to hold four of their own seats and win four more from the Republicans — a difficult path. Trade tensions with Canada (the top trading partner for 26 US states) and diesel at $6 a gallon just as farmers bring in the harvest could help them in some key states.
Three possible outcomes
| Outcome | Likelihood | What it could mean |
| Democrats win the House, Republicans keep the Senate | Most likely | New domestic laws become much harder to pass. Expect more scrutiny of the administration and possible stand-offs over government funding and the US debt ceiling, which is expected to be reached around mid-2027. Pressure from bond markets should limit any big spending splurge. |
| Democrats win both chambers | Possible | Still short of the two-thirds majority needed to override a presidential veto, so major new laws remain unlikely. However, the Senate approves key appointments, including to the US Federal Reserve, giving Democrats a check on these and helping protect the Fed’s independence. |
| Republicans keep both chambers | Least likely | Some campaign promises, such as $5,000 payments to every adult (estimated cost $1.2–1.35 trillion), would still struggle to win the support of more fiscally cautious Republicans. |
Why gridlock need not worry investors
In both of the most likely outcomes, the Democrats would not have enough votes to override the President, while the White House would find it much harder to push through its domestic agenda. With less room to act at home, the administration may lean more on executive orders and focus on areas where it has more freedom, such as trade and foreign policy. That could mean continued unpredictability on the world stage, including around tariffs.
Markets, however, have become well used to political noise. Elections and policy shifts often cause short-term price movements, but these movements rarely determine long-term investment outcomes. Gridlock can even be helpful, as it reduces the chance of sudden, large changes in policy. And as recent years have shown, the more turbulent the political backdrop, the more likely governments around the world are to support their economies with spending.
There are, though, a few developments we will be watching closely:
1. The US debt ceiling. A budget stand-off in 2027 could bring the threat of government shutdowns and some market volatility.
2. Federal Reserve appointments. Any pressure on the independence of the US central bank would matter more to markets than the election result itself.
3. Trade and tariffs. Particularly the ongoing tit-for-tat dispute between the US and Canada.
4. The pound and the dollar. For UK investors, returns from US assets are also affected by exchange rates, which can move on political news.
And so what are we doing in your portfolios?
Our portfolios are built on a well-diversified investment strategy which anticipates that political events like this will occur regularly. Spreading investments across regions, sectors, asset classes and fund managers with different approaches helps to reduce the effect of any single event or country — including who controls the US Congress. We are not making changes to portfolios simply on the back of the election, and will continue to judge events through our disciplined investment process rather than reacting to headlines. We stand ready to make adjustments if the long-term outlook — not short-term news — materially changes.
Bottom line
A divided US government looks the most likely result, bringing more political noise but limited change to policy in the near term. Experience consistently shows that investors who stay committed to a long-term, diversified strategy are better placed than those who try to move in and out of markets around events like these. If you would like to talk through what any of this means for your own portfolio, please get in touch with your adviser.
Important Information:
This document is for information purposes only and does not constitute personal financial advice. If you are unsure about whether a particular course of action is suitable for you, we recommend that you seek independent financial advice.
The value of investments and the income from them can fall as well as rise, and you may get back less than you originally invested. Past performance is not a reliable indicator of future performance. Tax treatment depends on individual circumstances and may be subject to change in the future. Tax and estate planning outcomes are not guaranteed.
Titan Wealth Planning Ltd is authorised and regulated by the Financial Conduct Authority (FCA reference number: 574458). Registered address: 101 Wigmore Street, London, W1U 1QU, United Kingdom.
