Analysts see benefits from US midterms
Today's US midterm elections could benefit Thailand and global trade, as stronger checks and balances between Congress and President Donald Trump could reduce US policy uncertainty and ease market volatility, analysts say.
Analysts foresee potential benefits from the upcoming US midterm elections for Thailand and global trade. Stronger checks and balances between Congress and President Donald Trump may reduce policy uncertainty and market volatility, claims Apichart Phubanjerdkul, senior director of strategic analysis at Tisco Securities. Current polls indicate a strong likelihood of the Democratic Party winning control of the House of Representatives, while the Senate race remains uncertain.
Election results could help ease market volatility, according to Apichart, potentially limiting uncertainty and supporting a recovery in Thai equities later in the month. Historical data shows that US equities typically perform positively following midterm elections, with a 70-80% probability of positive returns over 1-3 months.
Krunkt Siriwattanaket, managing director of Merchant Partners Asset Management, notes that the S&P 500 has risen in the six months following every US midterm election, regardless of which party controls Congress. However, investors should prepare for heightened short-term volatility by diversifying their portfolios. The S&P 500 has historically risen in the six months following every US midterm election, with the president's party generally losing seats in Congress.
The 2018 election saw Democrats gain control of the House while Republicans retained the Senate, with the S&P 500 rising in November before falling sharply in December and recovering in the first quarter of 2019, bolstered by a less restrictive monetary policy. Some investors are adopting a wait-and-see approach due to concerns over a possible US military strike following the midterm elections.
Trump previously indicated no further attack before the vote, leading to speculation that military action could resume afterward. Market uncertainty has increased demand for safe-haven assets and defensive stocks, causing gold prices to rebound after falling below $3,900 an ounce. Krungsri Securities warns that the risk of conflict has risen, citing media reports of US officials preparing for a short and intense military operation against Iran, potentially as early as November 4.
The market awaits the US response following the midterm elections, with results expected on the morning of Wednesday Thailand time.
Written by urgent.news from Bangkok Post Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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