U.S. midterm elections played out as expected, Democrats winning the House of Representatives while Republicans retained the majority in the Senate. Despite these mixed results, there is no blue wave. Remember that the ruling party usually loses a number of seats in the midterms. Even handing over power to Democrats in the House may be seen as a silver lining for President Trump since he will have someone to blame if the economy takes a turn for the worse by the end of his mandate.
At any rate, investor confidence has not been shaken by the midterm results as evidenced by the WTD stock performance of U.S. indices (S&P500: +1.17 percent) even though European, Japanese and emerging stocks lagged behind the U.S. market (MSCI EMU: +0.12 percent, FTSE100: -0.16 percent, Nikkei: +0.12 percent, MSCI EM: -2.06 percent).
Among the best sectors, health care (+4.02 percent) took the lead following strong results from Mylan and CVS. Unlike the previous week, utilities fared well (+3.10 percent). By contrast, energy trailed behind (+1.03 percent) as plummeting oil prices added to fears about a global economic slowdown (WTI down -3.79 percent – fifth week in the red with a cumulative loss of -18.28 percent over that period).
Lastly the 10-Year U.S. Treasury yield remained stable at 318bps.
Find the full report here : https://www.trackinsight.com/weekly-flow-report/2018-11-09/global