Trump's Midterm Defeat Shifts Power to Democrats

Democrats have secured a majority in the House of Representatives and gained seven Senate seats, marking a significant shift in US political power. The results reflect a broader verdict on President Donald Trump's leadership, with voters citing economic concerns as a key factor.

The president acknowledged the outcome but stated he would continue to oppose the Democratic agenda, using his veto power to block legislative efforts. Despite this, he expressed willingness to engage with Democrats, signaling a potential for limited cooperation.

The impact on global markets was initially mixed, with European stocks fluctuating before recovering. Investors moved back into banks and clean energy firms, while defense stocks declined amid fears of reduced military spending under a Democratic Congress.

Precious metals and government bonds saw notable gains, with gold and silver rising sharply. The euro strengthened against the dollar, and US Treasury yields fell, suggesting a cautious but optimistic market response to the political shift.

Analysts suggest a divided government may lead to fewer major legislative actions, which could benefit bondholders. However, concerns remain about the debt ceiling and potential borrowing costs, with some predicting a significant fiscal challenge by 2027.

Despite the Democratic gains, Trump retains influence through his veto power and Republican majorities in Congress until January. The new Congress will face the challenge of navigating a complex political landscape while addressing ongoing economic and foreign policy issues.