What does the US midterm election mean for investors?

The Democratic takeover of both chambers of Congress raises political confrontation but is unlikely to materially alter US economic policy or Candriam’s allocation.

• Democrats flipped at least seven Senate seats, including three in states held by Republicans for decades, but Trump retains veto power and authority over trade and foreign policy.
• The 2025 “One Big Beautiful Bill” will remain in place, while Democrats may seek concessions on Medicaid, SNAP, defence spending, federal funding and the debt ceiling.
• Democratic control of the House enables committee oversight, hearings, investigations and impeachment proceedings, while the Senate can block presidential nominees, including potential Fed governors; removing Trump would still require two-thirds of senators present.
• Technology regulation is expected to be more problematic at state and local level, particularly for data-centre permitting, grid connections, electricity rates and taxation, although broad moratoria are considered unlikely.
• IT earnings grew by more than 25% and demand remains robust despite concerns over capital spending and negative free cash flow; the upcoming Anthropic IPO is identified as a test for rebuilding AI exposure.

Takeaway: Candriam remains positive on equities, favours safe sovereign bonds as a hedge and keeps allocation unchanged, while expecting broader equity participation if the Iran conflict de-escalates and energy prices and interest rates fall.