Americans will go to the poll stations today to vote in midterms elections. Control over the Congress is in the game and pre-election surveys suggest that Republicans may get a majority in the House of Representatives while Democrats will retain control over the Senate. When the voting ends depends on the state with the earliest closes being at 11:00 pm GMT and the latest at 6:00 am GMT on Wednesday, November 9. Key votes will be held in Georgia (end - 12:00 am GMT) and Nevada (end - 3:00 am GMT) as those are close calls and may be decisive for who wins control. However, it should be noted that Democrats and Republicans are not the only ones taking part in elections as in some states other political parties also have representatives on the ballots. This means that there is a possibility that neither of the candidates will get over 50% votes and it means that a run-off will be needed. As such, there is a chance that control over the Congress won't be fully determined until weeks after midterms when run-offs are held.
It is widely believed that divided Congress is beneficial for stocks as such an outcome limits risk of sweeping reforms that may increase uncertainty for businesses. However, it also should be noted that S&P 500 gained in the 12-month period following each midterms since 1942, regardless of who was in power and whether the power was split between two parties.
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Open account Try demo Download mobile app Download mobile appS&P 500 (US500) bounced off the 3,700 pts support zone last week and launched a recovery move. Index climbed above the 50-session moving average (green line) and 23.6% retracement yesterday but momentum faded today. However, should bulls regain control, a test of the swing zone marked with previous price reactions and 100-session moving average (red line) cannot be ruled out in near-term.
Source: xStation5
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