Democrats won control of both the House of Representatives and the Senate in the US midterm elections on 3 November 2026. By early the next morning they had taken seven Senate seats and more than a dozen House seats from the Republicans, according to Associated Press race calls.1 Donald Trump remains president, so Washington is now divided.
This affects UK investors too. In August, US companies made up about 70% of the MSCI World index, which many global funds in ISAs and pensions track.2 Below we look at what the midterm results could mean for markets, and what we think matters most.
How markets reacted to the midterm results
In Asian trading on Wednesday morning, S&P 500 futures fell 0.5% and Nasdaq futures 0.9%, and the dollar softened.3 By early European trading, gold had risen 2% to $4,011 an ounce and the yield on 10-year US government bonds had fallen to 4.94%.4
It was a small move. Mark Malek of Siebert Financial expected some short-term volatility but thought most of the result was already priced in.5
AI and technology shares
Technology shares could feel the biggest effect. Tapas Strickland of Moomoo said that Texas and Georgia account for roughly a third of spending on AI data centres, so Democratic wins in the governor races there could slow the building programme. Others expect a Democratic Congress to bring more regulation of AI and big technology companies.5
The sector was already weak. Nick Ferres of Vantage Point noted that Goldman Sachs' broad basket of AI shares fell 15% in October and is more than 24% below its peak. Jesper Koll of Monex said sentiment towards AI had turned negative whatever the election result.5 If you own a US or global tracker fund, this affects you more than you might think. The 10 largest US companies make up nearly 40% of the S&P 500.2
Government borrowing and bond yields
Tai Hui of J.P. Morgan Asset Management said a divided government could keep US deficits more limited, but expects a fight over the debt ceiling, the legal limit on government borrowing, next year.5 Ed Yardeni of Yardeni Research warned that a long stand-off could push borrowing costs up.4
In the meantime, lower bond yields could help. Lombard Odier has noted that 10-year US government bond yields have fallen by around 0.2 to 0.25 percentage points on average in the three months after a midterm. Charu Chanana of Saxo said lower yields could eventually support technology shares.4,5
Tariffs and trade
Don't expect tariffs to go away. James Smith of ING pointed out that the president can set trade policy without Congress, and said a divided Washington could push him to rely on tariffs more, including against Europe.4 J.P. Morgan's Tai Hui made the same point: Trump keeps his influence over trade, foreign policy and regulation.5
The dollar
Views are split. Saxo's Charu Chanana said lower expectations of government spending were weighing on the dollar. ING's currency team said the dollar still takes its lead mainly from the Federal Reserve, the US central bank, and Monex's Jesper Koll expects it to strengthen if markets see the Fed as more independent.4,5
For a UK investor this matters as much as share prices. When the dollar falls against the pound, US shares are worth less in sterling, even if their price in dollars hasn't moved.
What history says about markets after midterms
J.P. Morgan Asset Management found that the S&P 500 has risen in the 12 months after every midterm election since 1950, by about 15% on average.6 We'd treat that with care. It's a small sample of fewer than 20 elections, each in a different economy. This time, Brent crude is above $100 a barrel and energy prices are high because of the war with Iran.4 We think that's likely to matter more to markets over the next year than who controls Congress.
We agree with Michael Arone of State Street Global Advisors, who said the bigger risk is investors overreacting to the result.5
What to do now
Our view is that an election result is a poor reason to change a long-term investment plan. Selling after a political shock means you then have to decide when to buy back in, and that's where most of the damage is done. It's a good time, though, to check how much of your portfolio depends on US technology shares and on the dollar, and whether that's a deliberate choice.
If you have money to invest before the tax year ends on 5 April 2027, our guide to the ISA allowance explains how to shelter it from tax. For the UK changes that matter just as much this year, see our Autumn Budget 2026 summary. Our investment page explains how we manage portfolios. To talk through your position, book a consultation. The first meeting is at our cost.
US midterms: common questions
Do midterm elections affect the president?
They don't change who the president is. Trump's term runs until noon on 20 January 2029.7 But Congress passes laws and controls government spending, so with Democrats running both chambers, the president needs their support to get new laws through. Congress can only overturn a presidential veto with a two-thirds majority in both the House and the Senate.8
When does the new US Congress take over?
The newly elected Congress begins at noon on 3 January 2027, the date the US Constitution sets for the start of each new Congress.7
This page is general information about the tax rules and does not constitute advice and it is important to remember that tax treatment depends on your individual circumstances and may change in future.
The value of investments and the income from them can fall as well as rise. You may get back less than you invested. Past performance is not a reliable indicator of future results.
Sources
Sources checked on 4 November 2026.
- Spectrum News, reporting the Associated Press, AP: Democrats win control of Senate, House in midterms, 4 November 2026.
- Laurium Capital, via Daily Maverick, Just how top-heavy are global equity indices today?, 26 August 2026.
- Reuters, via Yahoo Finance, Stocks, dollar slide as stunning victories for Democrats jolt AI bets, 4 November 2026.
- Euronews, US midterms: what Trump's defeat means for Europe and global markets, 4 November 2026.
- Reuters, via Yahoo Finance, Market analysts react to Democratic sweep in US midterms, 4 November 2026.
- J.P. Morgan Asset Management, How do markets perform post-midterms?, Jordan Jackson, 7 October 2026.
- US National Archives, The Constitution: Amendments 11 to 27 (20th Amendment).
- US National Archives, The Constitution of the United States: a transcription (Article I, Section 7).
Inheritance Tax, Estate Planning, Tax Planning & Some Agricultural investments are not regulated by the Financial Conduct Authority.
The short version
- Democrats won both the House and the Senate on 3 November 2026
- About 70% of the MSCI World index is in US companies
- US share futures dipped, gold rose and the dollar softened
- AI and technology shares look most exposed
- Divided government could mean smaller deficits
- A debt ceiling fight is likely in 2027
- Tariffs stay largely in the president's hands
- The S&P 500 has risen in the year after every midterm since 1950