Democrats won control of both the House and Senate, including seats in states that have voted Republican for decades. For India, the result makes renewed US strikes on Iran less likely and supports lower oil prices.
Democrats won control of both chambers of the US Congress in Tuesday’s midterm elections, according to projections by major US networks. It is a significant setback for President Trump, the first president in about 20 years to lose both the House and Senate in a midterm election.
In the Senate, MS NOW’s tally showed Democrats with 54 seats and Republicans with 44. Democrats needed a net gain of four seats to take control. They gained far more.
The scale of the wins in traditionally Republican states stood out. In Texas, Democrat James Talarico defeated Republican Ken Paxton with about 55% of the vote. Kansas also elected a Democratic senator, Adam Hamilton. Democrats flipped Senate seats in Ohio, Iowa, North Carolina and South Carolina. In Maine, Democrat Troy Jackson defeated longtime Republican Senator Susan Collins, who conceded. In Michigan, Democrat Abdul El-Sayed won a closely watched race and, CNN projected, will become the first Muslim senator in US history.
In the House, Democrats won the three seats they needed early in the night. MS NOW estimated they could end with about 250 of 435 seats, a large majority, although many races were still being counted.
US stock futures, which had fallen during the night, recovered after the results became clear.
What it means for Iran
For Indian markets, the most important question is what happens to US policy on Iran.
The president keeps control of military decisions, but a Democratic Congress gains significant power to check the administration. It can hold hearings, restrict funding for military operations and pass war powers resolutions. Even if the president can veto some of these measures, the political cost of resuming large-scale strikes on Iran rises sharply when both houses of Congress are held by the opposition.
That supports the diplomatic track. Talks between Iran, Qatar and the US have continued in recent days, and oil has already fallen below $110 on hopes of a settlement. A Congress that is likely to oppose new military action makes those hopes more realistic.
For India, which imports about 85% of its crude, lower oil helps on several fronts: the trade deficit, the rupee, inflation, and the margins of oil marketing and consumer goods companies. The rupee strengthened to 94.58 a dollar on Wednesday, and Indian shares rose for a fifth straight day.
Trade, tariffs and markets
The second area is trade. A Democratic Congress is likely to scrutinise the administration’s tariff policy more closely. That could slow new tariff measures and make US trade policy more predictable, which would help Indian exporters in textiles, pharma, engineering goods and IT services.
There are risks too. A divided government can lead to deadlock over budgets and the debt ceiling, which has unsettled US markets in the past. And the administration may respond to the defeat by relying more on executive actions, including on trade, which do not need Congress.
US markets have historically done well after midterm elections, once the outcome is known, because divided government tends to limit large policy changes. This election comes as US technology stocks are correcting, with the Nasdaq-100 more than 10% below its record. A clear result removes one source of uncertainty.
For Indian investors, the coming weeks will show whether the election changes the administration’s approach to Iran. Any sign of progress in talks would likely push oil lower, which would support Indian markets into the end of the year.
About The Author
