1. Midterm results: Democrats took the House of Representatives in Tuesday’s election, while Republicans retained control of the Senate, according to CNN projections. That likely means little change for America’s fiscal, trade or regulatory policies.
“This was the most benign result possible from this midterm election. While largely expected, confirmation is probably positive for risk assets — in the US and globally,” noted analysts at Gavekal Research.
The results failed to deliver any big surprises and markets are unlikely to be impacted as much as they would have been if the Democrats had also taken the Senate.
US futures pointed to a clearly positive start for Wall Street on Wednesday.
2. Asia slips, Europe gains: Asian stock markets posted modest losses after the midterm results, with Tokyo’s benchmark Nikkei index and the Shanghai Composite ending 0.3% and 0.7% lower on Wednesday.
But by the time European markets opened, investors were focusing on the positives of a divided Congress — the prospect of a period of government inactivity. London’s FTSE 100 index, Germany’s DAX and France’s CAC 40 all gained more than 1% in morning trade.
3. BMW earnings: German carmaker BMW (BMWYY) reported a 24% drop in profit for the quarter ended September, saying the US-China trade war and fluctuating prices of raw materials had a “dampening effect” on its financial performance.
China is a big market for the company, which sold more cars there last year than it did in the United States and Germany combined. Last month, BMW also paid $4 billion last month to take full control of its China business, after the country relaxed restrictions on automotive ownership. The deal, which will see BMW up its stake in its Chinese joint venture from 25% to 75%, is expected to close in 2022.
4. The New Fox: 21st Century Fox will report earnings before the open on Wednesday, and investors will be watching closely for updates on its $70 billion deal with Disney. That deal, which includes much of Fox’s entertainment division, is expected to close in the coming weeks and will make way for the “New Fox” under Lachlan Murdoch.
The “New Fox,” which will consist of Fox, Fox News and Fox Sports, is attempting to shield itself from cord-cutters and focus on live news and sports.
5. Coming this week:
Wednesday — Monster Beverage (MNST), 21st Century Fox (FOXA), Sinclair Broadcast Group (SBGI), Hostess Brands (TWNK), Tribune Publishing (TPCO), News Corp. (NWSA), Groupon (GRPN), Humana (HUM), Qualcomm (QCOM), TripAdvisor (TRIP), Roku Inc. (ROKU), IAC (IAC), Wynn Resorts (WYNN) earnings; FOMC meeting
Thursday — AMC Entertainment (AMC), Activision Blizzard (ATVI), Crocs (CROX), Gannett (GCI), Walt Disney (DIS), Party City (PRTY), Discovery (DISCA), Dropbox (DBX), Hertz Global Holdings (HTZ), Yelp (YELP), FOMC meeting