America Votes on Tuesday. Why a US Midterm Election Can Move Gold, the Dollar and Your Stocks, Even If You Have Never Heard of One

Next Tuesday, 3 November, Americans vote. Not for a president: Donald Trump is not on the ballot and will be in the White House until January 2029 whatever happens. They are voting for the entire House of Representatives, a third of the Senate and 36 state governors, in what is called a midterm election because it falls in the middle of a presidential term.

Most Malaysians have never followed one, and it is easy to see why. No new president, no inauguration, no obvious reason for gold or the ringgit to care. Yet the midterm is the single most reliable calendar event in the US stock market: since 1950 the S&P 500 has risen in the 12 months after every one, without exception. This article explains what is being decided, who is expected to win, what history says markets do next, and what it means for a trader in Kuala Lumpur.

📌 Key points

• On 3 November the US elects all 435 members of the House and 35 senators. Republicans currently control both; polls and prediction markets give Democrats roughly an 80% to 90% chance of taking the House and a coin-flip on the Senate.
• Voters are angry about prices: inflation is 3.7%, petrol is up 9% in a month, and only 26% approve of the president’s handling of the economy.
• The likely result is “divided government”: a Democratic House that can block new laws but cannot pass its own. Markets historically like that; it means fewer surprises.
• Since 1950 the S&P 500 has been higher 12 months after every midterm, averaging about 15%. The year before a midterm is usually the weakest of the four-year cycle, though 2026 has been an exception so far.
• For Malaysia the election changes little directly: tariffs, interest rates and the dollar are set by the president and the Fed, not Congress. The risk is a contested result, and the opportunity is the usual post-election rally.

What a midterm actually decides

The US splits power three ways. The president runs the executive branch and sets trade, foreign and much economic policy by order. Congress, made of the House and the Senate, writes laws, approves budgets and confirms appointments. The courts referee. A midterm changes only Congress.

Right now Republicans hold the presidency, the House and the Senate: what Americans call a “trifecta”. That is what has allowed the administration to pass its tax and spending programmes in its first two years. If Democrats win the House, every new law needs their agreement, and they gain the power to hold hearings and investigations. If they also win the Senate, they can block the president’s appointments, including to the Federal Reserve. What they cannot do is undo tariffs, change interest rates or reverse executive orders. That stays with the president.

Who is expected to win

Forecaster (late Oct)	Democrats win House	Democrats win Senate
Decision Desk HQ	80% (median 238 of 435 seats)	57%
Kalshi prediction market	91%	65%
Poliwave	86%	58%

The reason is prices. Inflation is 3.7%, petrol rose 9.1% in September alone to about US$4.29 a gallon, and oil is above US$110 with the Iran conflict unresolved. Eighty-four percent of voters tell Pew the economy is very important to their vote, and only 26% tell AP-NORC they approve of the president’s handling of it. Trump’s overall approval sits between 30% and 37% depending on the poll. In competitive districts, 41 of 62 Republican candidates have been keeping their distance from him in their campaigns, which tells you what their own polling says.

The Senate is closer. Its map this year favours Republicans, and the chamber is effectively a 47–47 toss-up with the outcome resting on a handful of states: Alaska, Maine, Texas, Ohio, Iowa and Kansas. Count on the House result by Wednesday morning Malaysian time and the Senate taking longer.

What history says markets do next

Three patterns hold across every midterm since 1950:

1. The year before is the weak one. The second year of a presidential term is on average the worst of the four for the S&P 500 and the most volatile, as uncertainty about the vote builds. 2026 has broken the pattern on returns, up about 13% to August, but not on volatility.
2. The year after is the strong one. The S&P 500 has been higher 12 months after every midterm since 1950, 19 out of 19, with average gains of about 6% after three months, 10% after six and 15% after a year. The usual explanation is simple: the uncertainty is gone, and presidents in their third year want a strong economy going into the next election.
3. Divided government is fine. The only configuration with negative average returns is a unified Republican government, which is what exists today. A Democratic House with a Republican president has historically produced above-average returns, mainly because nothing dramatic can pass.

The caution is that 19 observations are not a law of physics. The market also rose after midterms because the economy did; a recession or a Fed hiking cycle would matter more than any seat count.

What the professionals are saying

• Morgan Stanley: the outcome matters less than trade, geopolitics and regulation, all of which the executive branch controls. Do not reposition a portfolio for Congress.
• Morningstar: a Democratic sweep would pressure financials and industrials through tougher regulation, and help consumer staples and alternative energy. Under any result, bond yields stay elevated because neither party is cutting the deficit.
• JPMorgan: a Democratic Congress is a risk for the AI data-centre trade, through scrutiny of power use, permitting and tax breaks. After this week’s Big Tech results that sector does not need another headwind.
• TD Securities: the tail risk is a contested or delayed result, which would raise volatility and the dollar at the same time.
• Fed Chair Kevin Warsh, asked on Wednesday whether the election affected the rate decision: “Politics played no role.” The next Fed meeting is 9 December, five weeks after the vote.

What it means for a Malaysian trader

• Tariffs do not change on Tuesday. The 10% US tariff on most Malaysian goods, with semiconductors exempt, is an executive decision. A Democratic House can hold hearings; it cannot repeal it. Bursa’s exporters should not expect relief from this vote.
• The dollar and the ringgit respond to the Fed, not Congress. The ringgit trades near 4.1 to the dollar on the gap between US rates at 3.75% to 4.00% and Malaysia’s 2.75%. That gap is set in Washington’s Fed building and Kuala Lumpur’s Bank Negara, which meets on 5 November, two days after the vote, not in the House.
• Gold likes uncertainty, not elections. Gold does not have a midterm pattern. It will move on Tuesday night only if the result is unclear or if a Democratic Senate makes the president’s next Fed appointments harder, which would be read as a slightly less political Fed.
• The US indices have the clearest pattern. If you trade the S&P 500 or Nasdaq, the post-midterm rally is the best-known seasonal in the calendar. Known seasonals get priced early, and this year’s rally in AI stocks may have borrowed from it. Treat it as a tailwind, not a trade.
• Watch foreign flows on Bursa. A calm result that lifts US risk appetite usually reaches emerging markets within days. A contested one does the opposite. KLCI foreign buying in November will tell you which happened.

FAQ

What is a US midterm election?

An election held two years into a four-year presidential term, on the first Tuesday after the first Monday in November. All 435 House seats, about a third of the 100 Senate seats and most state governors are decided. The president is not on the ballot.

When is the 2026 US midterm election?

Tuesday 3 November 2026. Results for the House are usually clear by the following morning in Malaysia; close Senate races can take days.

How do midterm elections affect the stock market?

Since 1950 the S&P 500 has risen in the 12 months after every midterm, by about 15% on average, while the year before a midterm is usually the weakest of the cycle. Divided government has historically coincided with above-average returns.

Does the US midterm election affect Malaysia?

Mostly indirectly. Tariffs, the dollar and US interest rates are set by the president and the Fed, which the midterm does not change. A clear result tends to lift global risk appetite and foreign buying on Bursa; a contested one tends to strengthen the dollar and pressure the ringgit.

Who is expected to win the 2026 midterms?

Forecasters give Democrats about an 80% to 90% chance of winning the House and roughly a 55% to 65% chance of winning the Senate, driven by voter anger over inflation and petrol prices and the president’s low approval ratings.

Summary

On 3 November Americans elect a new House and a third of the Senate, not a president. Polls and prediction markets expect Democrats to take the House on anger over 3.7% inflation and rising petrol prices, with the Senate a toss-up. The likely outcome is divided government, which blocks new laws but leaves tariffs, rates and foreign policy with the president. History is unusually consistent: the S&P 500 has risen in the year after every midterm since 1950, by about 15% on average. For a Malaysian trader the direct effects are small, because the levers that move the ringgit and Bursa’s exporters stay with the White House and the Fed. The things to watch are a contested result, which would lift the dollar, and November’s foreign flows, which will show whether the post-election rally reached Kuala Lumpur.

Disclaimer

This article is for education only and is not investment advice. Forecasts and polls are as of 30 October 2026 and will change; historical patterns do not guarantee future results. Do your own research or consult a licensed adviser before trading.

Related reading

• What is the Fed, and how does it move gold, the US indices and the ringgit?
• The new Fed chair won’t tell markets what comes next
• America’s inflation is “too high” because of oil. So why is petrol still RM1.99 in Malaysia?
• The importance of the US dollar, and the pillar behind it
• Why markets move so much on FOMC day