Electoral assets: what can Russian investors expect after the victory of the Democrats in the United States

The American stock market reacted to the results of the midterm congressional elections, first with rapid growth, and then with an equally rapid correction. In one day, its capitalization increased by $1.2 trillion, but the very next morning after the opening of trading, it fell by $780 billion. Due to expectations of a weakening of geopolitical tensions, oil prices fell by more than 7%. As a result, Russian stocks also came under pressure: the Moscow Exchange index opened with a decline of almost 1% on November 5, but later recovered. For investors from the Russian Federation, this may be a reason to re-assess the risks and take a more conservative approach to portfolio formation, experts say. See the Izvestia article about how political changes in the United States can change market sentiment in Russia.

How did the markets react to the results of the congressional elections

On November 3, Americans elected the new composition of the House of Representatives (435 seats) and a third of the members of the Senate (35 seats). According to preliminary results, the Democratic Party gains control of both chambers.

Republican Donald Trump has already declared his willingness to work with the Democrats and explained the defeat of his party by the fact that he himself was not on the ballot.

The results of the vote instantly affected the American stock market — in one day its capitalization increased by $ 1.2 trillion. On November 4, the Dow Jones index rose by 3.03% (to 53,356.12 points), the Standard & Poor's 500 (S&P 500) — by 1.58% (to 7,688.62 points), and the Nasdaq — by 1.44% (to 25,736.51 points), according to trading data.

At the same time, on November 5, the American market fell by $780 billion in 10 minutes of trading.

According to experts interviewed by Izvestia, quotes may still rise in the near future. However, the increase will be hampered by high interest rates for the United States (3.75%-4% per annum) and the absence of a deal with Iran. The Fed will make a new decision on monetary policy on December 9. If the key rate is not raised, it will help the American stock market grow again. The resumption of negotiations on the Middle East will also have a positive impact.

The leader of the Democrats in the Senate, Chuck Schumer, in a conversation with reporters, promised to end the military clash with Tehran. Against this background, oil prices fell by more than 7% on Wednesday. By 17:00 Moscow time on November 5, Brent was trading at $96.66 per barrel. Before the vote, the brand cost more than $100 per barrel.

This, in turn, affected the Russian stock market. As of 09:15 Moscow time, the Moscow Exchange and RTS indices lost 0.88% each relative to the close of the previous trading day, dropping to 2,420.45 and 933.63 points, respectively. By 17:00 Moscow time, the fall recouped: the indicators rose to 2448.26 and 944.23.

At the same time, the securities of commodity companies fell the most among the blue chips by 17:00 Moscow time. The leaders of the decline were Rosneft (-2.82%), Tatneft (-1.81%), Gazprom (-1.65%), Novatek (-1.37%) and Lukoil (-0.98%).

Russia is affected by changes in the political balance in the United States primarily through oil, sanctions expectations and investors' willingness to take risks, said Denis Astafyev, fund manager and founder of the SharesPro fintech platform.

The American elections themselves should not become a reason for a sharp change in the strategy of Russian investors, says Vladimir Chernov, an analyst at Freedom Global. However, their results are a signal to review the portfolio structure.

For example, if, against the background of recent agreements between Moscow and Washington, including on the supply of Russian diesel, and the course towards improving relations, the investor formed a portfolio with the expectation of easing sanctions, then it is worthwhile to take a different look at the risks associated with this and assess the feasibility of a more conservative strategy. Currently, the easing of restrictive measures may be very gradual, partial, and even reversible, said Alina Poptsova, stock market analyst at Alfa Capital Management Company.

Will the American elections affect the Russian economy

The Russian stock market, like Wall Street, is sensitive to news about negotiations: positive statements can provoke a rapid increase in quotations, Denis Astafyev emphasized. However, for a sustained positive trend, real changes are needed — simplification of international settlements, improvement of logistics and reduction of uncertainty for businesses. If these conditions are met, a reduction in the geopolitical premium in the value of Russian assets may have a more noticeable impact on the market than a moderate decline in oil prices. First of all, the securities of banks and companies focused on domestic demand will grow.

In the next few days, Brent may fall in price by another 8-10% against the background of a reduced risk of a military conflict with Iran, believes Oleg Abelev, head of the analytical department at the Rikom-Trust investment company. If the confrontation ends, the quotes will continue to decline. This may also put pressure on the ruble: with a decrease in the cost of raw materials, export earnings will decrease, and hence the supply of foreign currency on the market. However, this effect will not appear immediately, but with a certain time lag — as a result, the ruble exchange rate may reach 90 per dollar in the next four months.

At the same time, Brent is still trading significantly above the level of the beginning of the year: since January, this brand of oil has risen in price by about one and a half times. It is expected that by the end of the year it will cost about $90 per barrel, the expert believes. However, the forecast may be revised upward if negotiations on the Strait of Hormuz drag on. Quotes will also jump in the event of a breakdown in the US-Iranian negotiations or new attacks by the Houthis, he argues.

According to Vladimir Chernov from Freedom Global, in the near future the Moscow Exchange index will be in the range of 2400-2500 points. The Russian market will be supported by the stabilization of oil prices, specific agreements on sanctions restrictions and a slowdown in inflation, he noted. On the contrary, the introduction of new sanctions and the prolongation of the key rate reduction cycle will increase the pressure on quotes.

At the same time, the new composition of the congress will begin work only in 2027, so further decisions of the American authorities will become clear later.

In the context of ongoing geopolitical instability, investors should pay attention to liquid money market instruments, leaving part of their funds in them until the situation is clarified, Denis Astafyev said. Among them are OFZs and reliable corporate bonds.

But when choosing bonds and stocks, it is important to take into account, first of all, the level of risk. In particular, preference should be given to companies with a moderate debt burden and stable profits, rather than those whose prospects are solely related to the possible lifting of sanctions, he added.

OFZs now also offer attractive returns. In November 2026, it ranges from 14% to 16.5% per annum, depending on the maturity. Government securities will be especially attractive in the event of a slowdown in inflation and a reduction in the key rate. According to Denis Astafyev, unlike a bank deposit, they do not guarantee the safety of value in case of early sale: if expectations regarding rates change, the market price of securities may decrease significantly. Therefore, it is important for an investor to assess in advance whether he is ready to hold the bonds to maturity, or whether the funds may be needed earlier.