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Democrats Take Control of the House; Republicans Hold Senate - EMEA Brief 7 Nov



  • US mid-term elections have resulted in a gridlock in Washington, Trump's Republican Party hold the senate having had key victories in Texas, Indiana and North Dakota.
  • The Democrats have gained control of the House of Representatives which has set up a divided Congress until the next presidential election in 2020.
  • The dollar has dipped as the dust settles on the results of the mid-terms, the Euro and Yen both rose 0.2% against the dollar. The dollar index, which measures the value of the dollar relative to a basket of foreign currencies, was also down.
  • The Asian markets reversed earlier gains as results began to filter in from the mid-terms, the Hang Seng dipped 0.2% and Tokyo's Tropix fell 0.4% after initially gaining 1.2%. The Nikkei also saw a late fall and finished down 0.28% as investors locked in profits after the news broke that the Democrats took control of the House of Representatives.
  • Shadow Brexit secretary Sir Keir Starmer has announced that if MPs are left "blind" as to the details of the UK's future relationship with EU the Labour party will vote against a Brexit deal, increasing the pressure on Theresa May.
  • Oil prices dipped as the US allowed buyers of Iranian oil sanction wavers, US crude fell 0.56% whereas Brent slipped 0.25%.

UK, US and Europe: Trump had declared victory in the US midterms as he wrote in Twitter "Tremendous success tonight. Thank you to all!", although he will face increased challenges when attempting to push through policies due to the Republicans losing the House. US equities traded slightly higher as the mid-term results went generally as expected, S&P futures traded 0.3% higher. Dow Jones futures were also up around 0.4%, followed by Nasdaq futures rising 0.6% as markets welcomed the fact that there were few surprises at the polls. However it's not all good news, according to the chief strategist at CCB International Securities, people could view investing in the US as being less appealing due to the more divided political landscape stating it "could be quite disruptive". Interesting to see how the European markets react to the results, as major European indices are generally expected to react positively to the notion of no news is good news.

The lack of clarity over the terms of the UK's divorce from the EU is causing concern in Westminster. Ahead of his meeting with EU officials today, the shadow Brexit secretary reminded May that MPs have been promised a "detailed, precise and substantive" Brexit agreement that parliament will be allowed to vote on. On Tuesday, the Prime Minister indicated to her cabinet that she is confident of agreeing a deal with the EU, but reiterated that it would not be "done at any cost" as deliberation continues over the contentious issue of the Irish boarder. 

Economic calendar - key events and forecast (times in BST)


Source: Daily FX Economic Calendar

Corporate News, Upgrades and Downgrades

  • Adidas has lowered revenue expectations for the full year after releasing their third quarter results, previously forecasts were 10% while the sports giant now expects growth of between 8% - 9%.
  • BMW has announced a fall in profits in their Q3 results as operating profit fell 27%, which was below expectations, as the firm indicates high research and development costs has impacted profits.
  • ITV has warned that advertising revenue is expected to be down around 3% in Q4 after reporting a marginally better than expected 2% rise in 9-month ad revenue.
  • Pre-tax profits at Marks & Spencer have rose 7.1% to £126.7 million within the last six months, however revenue was down 3.1%. Food, M&S's largest turnover business unit, revenue fell by 0.2% due to "tough trading" conditions in the competitive landscape.

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