US Midterms May Reshape Congress, But Uncertainty Remains For Global Markets: Analysts

(MENAFN- Khaleej Times) A possible Democratic takeover of both chambers of the US Congress could trigger two years of legislative gridlock under President Donald Trump, creating uncertainty for global markets, investors and businesses.

For international investors, congressional control is only one part of a more complicated economic equation. They are watching how the US midterm elections could affect US policies on taxation, trade, government spending and regulation, particularly amid geopolitical tensions.

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Dubai-based Rayad Kamal Ayub, managing director of Rayad Group, said uncertainty over tariffs, fiscal deadlines, sanctions and technology regulations could be more disruptive to markets than political disagreements. He added that the outcome matters to the Gulf, where energy prices, dollar liquidity, shipping security and US foreign policy directly influence investment and trade decisions.

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“Markets can absorb political disagreement. What they struggle to price is uncertainty about tariffs, fiscal deadlines, sanctions and the rules governing emerging technology,” Ayub told Khaleej Times on Monday.

He noted the consequences of political decisions in Washington are increasingly felt across the Gulf, where investment portfolios, energy markets and international trade remain closely connected to the US dollar and American monetary and foreign policy.

“The Middle East is not a spectator. Energy prices, dollar liquidity, shipping security and US foreign policy reach directly into our investment decisions. The deeper question is whether Washington can still make commitments that endure,” Ayub underscored.

For investors, the distinction is significant. While a hostile Congress could frustrate major legislative changes, the administration would retain considerable influence through executive decisions and the implementation of existing laws.

Brett Calapp, co-founder and chief executive of Wandando, an online gaming platform, said political uncertainty can become a substantial commercial burden.

“I have worked in regulated industries for 22 years. Businesses can build around tough rules, provided the rules are clear and durable,” said Calapp, noting that in“digital assets and prediction markets, uncertainty is expensive; it delays product launches, raises compliance costs and makes capital harder to commit.”

Real measure of US Congress

Calapp argued that the real measure of the next US Congress would be its ability to produce legislation rather than prolong disputes between the parties. He added:“I am less interested in who claims victory on election night than in whether anyone can pass something useful afterwards.”

His concerns reflect a wider challenge for emerging industries, where innovation frequently moves faster than the legislative process, leaving companies to navigate differing federal and state requirements.

The political contest is also taking place against a changing information landscape, with artificial intelligence and digital content raising concerns about the ability of voters to distinguish authentic information from fabrication.

Dr Stephen Parker, a Harvard-trained educationist and former owner of Balboa High School in San Diego, said the challenge extends beyond identifying misleading political advertisements.“An election tests more than political loyalties; it tests the habits of judgment learned long before a ballot is cast,” Parker said.

“Education must teach students and adults to ask where a claim originated, whether it can be corroborated and what context is missing. Democracy depends upon citizens who can tolerate uncertainty while seeking reliable facts.”

World strained by conflicts

Geopolitical tensions add another layer of uncertainty. For Ayub, disagreements between Congress and the White House could affect security assistance, defence spending and the credibility of American commitments overseas.

He noted "the US is already making decisions in a world already strained by conflicts, trade fragmentation and competition over technology."

“A Republican Congress, a split Congress and a Democratic Congress would each create different negotiating conditions. Whatever the electoral outcome, the test for Washington will begin when the campaigning ends: whether its political leaders can reach decisions on which the rest of the world continues to depend,” Ayub added.

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