After the US midterm elections, uncertainty and expectations are colliding in the equity market. Investors are focusing on the performance of AI-related stocks and the direction of policy.
With the US midterm elections approaching, the equity market has been showing signs of caution. Market participants have cited a historical tendency for share prices to rise more readily depending on the post-election outcome, while developments surrounding AI continue to attract attention. Some believe the upward trend in the Nikkei 225 is beginning to lose momentum, adding to uncertainty about the outlook.
Makoto Hattori (服部 誠), Head of Equity at Marusan Securities, said that uncertainty could be resolved after the election, leading to higher share prices, while expressing the view that a Democratic advantage could result in tighter regulation as regards AI policy. The market is thought to ease investor sentiment by making the feasibility of policies easier to predict.
Shuji Hosoi (細井 秀司), Senior Strategist at Daiwa Securities, said that if the Democratic Party gained control of both chambers, it would be difficult to advance policies involving fiscal spending, and predicted that a Republican majority in the House would be more positive for share prices.
Some market participants are concerned about Trump's (トランプ) conduct if the Republican Party is defeated. Others have pointed out that a more hawkish stance and uncertainty over the prospects for an agreement related to Iran could create headwinds for the market. Some believe that post-election conduct could continue to weigh on the market as a source of uncertainty.