As the midterm elections results roll in early Wednesday morning, it appears that the Democrats will control the House of Representatives, while the Republican party will control the Senate. According to Reuters, markets on Wall Street and across the world celebrated the results with big jumps as many investors believe that tax cuts implemented under President Trump are likely to remain in place.
According to CNBC, at the time of this writing, the Dow Jones Industrial Average was up 1.35 percent, the S&P 500 was up one and a half percent, and the NASDAQ was up more than two percent.
“The good news in a way for markets is that there was an uncertainty that’s now been removed. We know where we stand for the next two years, and investors will focus back on the fundamentals, which are (company) earnings growth and the economy,” said Zürich Insurance Group’s chief market strategist, Guy Miller, during an interview with Reuters.
It wasn’t only the US markets which saw gains on Wednesday. The STOXX Europe 600 Index, which is comprised of 600 components in 17 European countries, was up by more than one percent. Australian markets also saw a modest gain, as did markets in Hong Kong.
Despite the good news, some markets in Asia and the Pacific fell on Wednesday. According to a report from CNBC, the Japanese Nikkei 225, the South Korean Kospi, and the Chinese Shanghai composite all took a small loss as the election results came in.
“The much hyped US midterms made for choppy trading conditions,” wrote RBC Capital Markets strategist Sue Trinh, according to CNBC. “In the end, it was the outcome that most experts, polls and betting odds predicted.”
In addition to the hotly contested Congressional races, several amendments were on the ballots in many states. One Colorado amendment in particular — proposition 112 — would have brought more regulation and restriction on oil and gas companies in the state if it had passed. However, as news broke that 112 had failed, energy stocks began to boom. According to a report from CNBC, Bonanza Creek Energy, Extraction Oil and Gas, PDC Energy, Anadarko Petroleum, and Noble Energy all posted strong gains in the wake of the proposal’s failure.
Many of the companies have operations in Colorado’s Wattenberg Field, which lies north of the Denver metro area.
Although Colorado voters told their legislature they wanted a hands-off energy policy, the state’s new Governor Jared Polis (D) has said that he plans to move the state away from fossil fuels.
“Climate change is real and the consequences are becoming a reality. I’m running on a plan to bring Colorado to 100% renewable energy by 2040, we can’t afford to wait,” Polis wrote on his campaign website.