Dollar falls and Wall Street rallies as US election 'clips Trump's wings' - as it happened

The Guardian - Nov 07, 16:54 GMT

Gridlock on Capitol Hill reduces chance of further fiscal stimulus and tax cuts, economists sayMidterm elections – live updatesMidterms results – live tracker 4

Gridlock on Capitol Hill reduces chance of further fiscal stimulus and tax cuts, economists say

European stock markets have closed solidly higher tonight, as a wave of relief sweeps through trading floors.

In London, the FTSE 100 has closed 76 points higher at 7117, up 1.1%.

Historically, equity markets have performed well out of a divided Congress as traders feel the government finds it difficult to get new laws passed, and therefore not much changes. The US economy had positive momentum going into the midterms, and that is likely to continue.

The rise in popularity of the Democrats could be construed as a vote against Trump’s tough trade stance, and perhaps the White House might soften its position regarding China. There is speculation the Democrats are keen to improve infrastructure, and we are seeing a rally in Caterpillar. Mr Trump has set his sights on tech giants like Amazon, and the outcome of the midterms might make it more difficult for him to go after tech titans.

Related: Midterms: McConnell hails 'Kavanaugh effect' and warns Democrats over investigations – live

Wall Street is pushing higher, after the Republican’s Senate leader suggested the next Congress could take a bipartisan approach.

If that happened (and it’s a big if, given the last two years) it could help to get tax reform and infrastructure legislation passed.

U.S. Senate Republican leader Mitch McConnell said on Wednesday infrastructure and healthcare would be on the U.S. Senate agenda in 2019, after Republicans widened their majority in the Senate but lost control of the House of Representatives in Tuesday’s elections.

Speaking to reporters, McConnell said senators would likely tackle Obamacare fixes and prescription drug prices, but that changes to Medicare and Social Security were unlikely.

The Dow surges, pops above 50-day moving average as Mitch McConnell says he'll work with Pelosi on bills like infrastructure

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