Nov 6 (Reuters) - Democrats rode a wave of dissatisfaction with President Donald Trump to win control of the U.S. House of Representatives on Tuesday, Fox News and NBC News projected, giving Democrats the opportunity to block Trump's agenda and open his administration to intense scrutiny.
In midterm elections two years after he won the White House, Trump and his fellow Republicans were set to maintain their majority in the U.S. Senate, CNN, NBC and ABC News said, following a divisive campaign marked by fierce clashes over race, immigration and other cultural issues.
Latest U.S. stock market report MARKET REACTION: STOCKS - U.S. S&P 500 e-mini futures were up 0.17 percent. MSCI's all-country world index was up 0.22 percent. DOLLAR - The US dollar index was down 0.38 percent
MARK GRANT, MANAGING DIRECTOR AND CHIEF GLOBAL STRATEGIST, B. RILEY FBR, INC, FT LAUDERDALE, FLORIDA
The split Congress scenario was the consensus expectation with the Republicans losing the House and the Republicans keeping the Senate. Although some say a split is good for financial markets, I disagree. The issue now becomes the Democrats paying more attention to the ... impeachment of Judge (Brett) Kavanaugh and the impeachment of President Trump. You could also argue that the Democrats might call for a roll back of the tax cuts. If those things come into actual play, I think it would be a disaster for the equities markets. I am somewhat concerned that this could really play out. This could be a decisive negative for the equity markets as well as the bond market.
JUSTIN WARING, INVESTMENT STRATEGIST, UBS GLOBAL WEALTH MANAGEMENT, NEW YORK Given that the "base case" scenario is playing outwhat looks like a perfectly average mid-term election in terms of the President's party losing an average of 31 or so House seatsmarkets are unlikely to react much ahead due to this result.
That being said, some parts of the U.S. equity market could begin to face headwinds over concerns about the tone coming from the Democratic House committees. For example, Representative Maxine Waters looks poised to chair the House Financial Services committee. She has long opposed deregulation efforts for financials. In our view, there is a very low chance of increased regulation under this Congress, but markets will begin to fret about 'what dreams may come' if Democrats win a follow-up victory in 2020. Even so, we continue to recommend an overweight to financials. Despite potential perceived headwinds from House committee hearings, there are bigger factors at play, and political considerations are unlikely to override the fundamentals.
(Americas Economics and Markets Desk; +1-646 223-6300 )