Waves, shifting tides and market ripples

Résumé détaillé

In SA, the key question is whether the recent local elections will produce stable coalitions that prioritise reform and better governance at municipal level.

South Africa and the United States held key elections last week. Global markets reacted strongly to the outcome in the US, but in South Africa, we’ll have to wait for coalition talks to conclude before reflecting on investment implications.

In SA’s case, the local election matters less to the kind of economic policymaking that usually moves markets. Nonetheless, dysfunctional municipalities, especially the metros, must be stabilised to unlock faster economic growth.

Read: Brent crude plunges 10% after Trump midterm rebuke Ramaphosa sees hope for US-SA relations after Democrats’ election sweep Democrats secure control of Congress in sharp rebuke of Trump

American voters delivered a massive rebuke to President Donald Trump by turning up in large numbers and handling significant victories for the Democratic Party in key races. While a ‘Blue Wave’ was expected, Democrats still surprised with the size of the win.

Not only did they regain the lower house of Congress, the House of Representatives, but they also won control of the upper house, the Senate, with comfortable majorities in both cases.

The latter was achieved by winning seats in states like Texas, Iowa, South Carolina, Georgia and Ohio that have traditionally been ‘Deep Red’ Republican strongholds.

This means that Democrats will have full control of Congress from late January onwards.

However, passing legislation will be difficult, as Trump can veto any law Congress approves. His veto can only be overturned with a two-thirds majority. In other words, only pieces of legislation that have support across both parties will become law.

This means little is likely to change between now and the next election in 2028. There will likely be disputes around the federal budget, particularly over raising the debt ceiling, and possibly government shutdowns as we’ve seen periodically in the past.

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