How will the US midterms affect Australian markets?

Explainer How will the US midterms affect Australian markets? Polling suggests Republicans’ chances of retaining both houses have waned. Here’s how the vote could steer demand for renewables, deflate AI stocks and spark volatility

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Donald Trump’s fight to retain control of Congress in the 3 November US midterms will carry direct consequences for Australian markets, whatever the outcome.

Democrats must flip four seats in both the House of Representatives and Senate to overturn narrow Republican majorities. Polls favour the Democrats to reclaim the house, but the Senate contest is too close to call.

Here’s how the vote could steer demand for renewables, deflate AI stocks and spark volatility, triggering ripples across Australian markets.

As Americans grapple with high living costs made worse by rising fuel prices, the chances of Republicans retaining both chambers of Congress have waned, polling suggests .

If Trump’s Republicans were to prevail, market watchers expect an immediate bump on Wall Street that would lift markets around the world, including in Australia.

Rob Talevski, chief executive of Webull Securities Australia, says maintaining control of Congress would pave the way for Trump to deliver signature fiscal stimulus, including a proposed $US5,000 payment to every adult American.

“It’s going to be somewhat like a Santa rally, ‘Here’s your Christmas present’. We’re going to see markets rally on that,” says Talevski.

But Talevski says any post-election sugar hit could quickly collide with the economic headwinds hitting the US and other advanced economies.

“It would be short-term, and then the air would come out of the balloon,” he says.

“It’s going to come back to our key problems we still all have, and some of those are high debt servicing levels, inflationary pressures and employment pressures.”

A Republican victory would also reinforce Trump’s aggressively pro-market stance, clearing the way for fresh momentum in the technology sector that has started to wobble in recent weeks over fears of an AI bubble.

Threats of government shutdowns, budget standoffs, and debt-ceiling negotiations would subside.

A split Congress, whereby Democrats control the house and Republicans the Senate, would probably curb the Trump administration’s spending measures, a result that markets often welcome because reduced borrowing helps cool .