The United States midterm elections are poised to usher in a period of heightened geopolitical focus from President Donald Trump, according to Matt Gertken, chief geopolitical strategist at BCA Research. BCA Research is a global independent research firm providing macroeconomic and financial market analysis. With Trump’s low approval ratings and high fuel prices, Gertken anticipates a Democratic sweep of both the House and Senate, along with a number of key gubernatorial races. Markets, already sensitive to artificial intelligence trade narratives, are bracing for potential drama as individual election outcomes remain tight.
Facing domestic gridlock with a Democrat-controlled Congress, President Trump is expected to intensify his focus on foreign affairs, a pivot already observed in his second term with ventures like those in Iran. Gertken suggests Trump will seek a “peace and prosperity package” for the 2028 presidential election, aiming to maintain the AI boom and low unemployment while securing crucial ceasefires. This strategy could involve calculated attacks on Iran to force negotiations for a ceasefire, stabilising oil prices around US$90 a barrel. Subsequently, Trump is anticipated to pressure Russia into accepting a ceasefire deal for Ukraine.
While markets may initially react with jitters, rising oil prices, and higher bond yields, Gertken posits a promising long-term outlook: eventual ceasefires, a sustained AI-powered business cycle, and beneficial political gridlock in Washington, seen as non-inflationary. This could sustain a bull market into 2027. However, the path ahead remains uncertain. Beyond 2027, potential challenges include higher US taxes if polls favour a Democratic White House in 2028, impacting corporate earnings and valuations. AI regulation also presents a potential handbrake. Despite the logical framework, President Trump’s unpredictable nature means investors should anticipate ongoing market volatility in the coming weeks and leading up to the 2028 presidential election.
