US stock market futures fell and the dollar weakened as early midterm election results and prediction markets pointed to an increased likelihood of a Democratic victory, raising the prospect of a divided government in Washington. Treasury prices gained.
According to latest Bloomberg report, S&P 500 futures declined 0.7%, reversing an earlier gain of 0.5%, while Nasdaq 100 futures fell 1.3%. The dollar weakened against all its Group-of-10 peers, and the yield on the 10-year US Treasury note dropped six basis points to 4.91%. The MSCI Asia Pacific Index was down 0.5%.
However, historical data suggests that US midterm elections have generally been followed by strong gains in equities, irrespective of the electoral outcome or the political balance of power in Washington, according to a CNBC analysis.
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An analysis of S&P 500 returns following elections between 1980 and 2024 found that the index gained an average 0.2% after one day and one week, and 1.1% after one month, across both presidential and midterm elections.