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I’ll bet my bottom dollar stocks are about to rally
The Telegraph • • business
Key Points:
- US and non-US stock markets, including the UK’s FTSE All Share and the US S&P 500, show a high correlation of around 0.8, indicating closely linked market movements influenced by US midterm election cycles.
- The 2022 market lows for both US and UK stocks coincided with the ramp-up of the US midterm campaigns, suggesting political events significantly impact global markets.
- The 2026 US midterm elections are forecasted to favor Democrats, with prediction markets and polling indicating a strong chance of flipping key Senate seats and gaining House control despite Republicans’ current slim majorities.
- Stock markets tend not to pre-price election outcomes due to widespread bias and emotional reactions, but historical patterns show increased gridlock post-midterms often boosts market bullishness.
- Despite extreme campaign rhetoric and political uncertainty, investors are advised to position for a likely “midterm miracle” that could drive stock gains in both the US and allied markets like the UK.
