Many investment managers said the results mean “something and nothing at the same time”, pointing to President Donald Trump’s ability to veto legislation and issue executive orders “over key matters”. That makes it unlikely anything will change that will “impact fixed income markets”.

The Republicans have lost control of Congress. With the count still under way, they have so far won 139 House seats to the Democrats’ 228. In the Senate, the Democrats have taken 54 seats and the Republicans 44.

Speaking to US media outlets, Trump conceded that the Democrats did a “good job”. He said he would accept the results and was looking forward to working with the opposition party, despite having the power to veto any legislation they advance through Congress.

He said: “In some cases they didn’t like the candidates, and in some cases those candidates were not my friend.” He also acknowledged that the impact of the US-Israel war on Iran on US consumer prices had affected the vote. He argued that high fuel prices meant voters could not see how well the economy was performing, claiming: “The gasoline was caused by Iran.”

Investment managers at leading trusts have now reacted to the results and their geopolitical impact on markets in countries from China to Europe.

China

Linda Lin, head of Chinese equities at Baillie Gifford and co-fund manager of Baillie Gifford China Growth Trust, spoke at a media roundtable.

“China is running its own game. It’s not dependent on the US. China is the largest buyer of semiconductor equipment globally and one of the largest buyers of chips, so think about the demand.

“I’m not talking about being a sideplayer. What China is focused on today is self-sufficiency. This is a portfolio on a different layer. It tells you the story of what China will do strategically in the long term, no matter what Trump, or anyone else, says on stage, because the AI game is really a matter of the future of productivity.

“It really matters to China’s advantage in physical AI and advanced manufacturing.

“Chinese semiconductor and AI stocks opened with a very aggressive high because of the US election. But if you look at it from a data centre perspective, who is building these data centres? The Chinese government. It has put AI at the top of its five-year plan, so there’s no pullback from the government on AI. I’m not judging what the US story about Trump means for the local market, because China runs a very independent game.

“It might even be a good thing if the US tries to slow down data centres, at the application layer and the model layer. If the US stopped building more data centres or launching new models, DeepSeek may beat them, and my question to the US is: can you take that risk?”

Europe

Joe Faraday, head of European equities and manager of European Growth Trust, said: “There are lots of component parts to this. If the oil price is a little lower, that probably helps Europe for sure.

“If there’s less prodding in a geopolitical sense, and you can see that from Iran, from Russia and Ukraine, and even in the comments generally made about Europe, that eases things. The phrase I’d use is ‘less bad’. It’s probably a bit of a relief valve for Europe in some ways.

“But let’s also be careful, because we have lots of elections to come in Europe. I’m quite optimistic about what could happen. There’s Spain’s election before year end, and then France, where I’m trying to challenge myself on what could be far less bad. You could see a return of ‘made in France’ and ‘France is great’. Maybe that is needed in some ways. I’ve spent some time on this, and I’m not skewed or too exposed.”

Bond markets

Colin Finlayson, investment manager at Aegon Asset Management, said: “With the midterm results now in, what does it mean for the bond market? In truth, it means something and nothing at the same time.

“The scale of the swing in favour of the Democrats is meaningful, and it’s clear that the country has spoken, but will the White House listen? While the President retains a veto and the power of executive orders over key matters, it’s unlikely anything will change that will impact fixed income markets.

“The potential for policy gridlock in Washington is now higher, and this could prove supportive for US Treasuries, as any further fiscal expansion is limited. Supportive, yes, but not dramatic.

“A pushback on AI and data centre expansion will be a concern for sectors more directly involved in this area, and any headwinds to growth that come as a result are another risk worth watching.

“For bond markets, the biggest driver remains the conflict with Iran and the level of energy prices. The outcome of the midterms, as eye-catching as it is, will have minimal bearing on that.

“If you are looking for a real change in the political and fiscal trajectory, this will need to wait until 2028 and the presidential elections. For now, the focus will return to economic data, the outlook for the Fed and whether AI wobbles continue to support government bonds.”

Policy

Lizzy Galbraith, political economist at Aberdeen, said: “A Democratic Congress will more closely scrutinise the President’s agenda, but Trump has already indicated he intends to use the presidential veto to curtail any legislative attempts. Congressional investigations into the actions of the President and his allies are likely, as well as into AI safety.

“The President will still have broad authority over foreign policy, including over any future decisions on US action in Iran. His frequent use of executive orders on immigration and trade policy also limits the likelihood of significant policy change in these areas.

“Still, the scale of the swing in this election may see Democratic ambitions in Congress grow. Attempts to pass legislation introducing greater federal oversight of AI and the data centre build-out are likely, as are measures to encourage clean energy projects. But any legislation is likely to require bipartisan cooperation in the Senate as well as avoiding a presidential veto, which limits its likelihood.

“Greater change to the policy landscape for data centres, potentially including the rollback of tax credits and less permissive planning laws, is possible given the broad Democratic victories in gubernatorial races, including in Texas and Ohio.

“Democrats will use their larger-than-expected majorities in the House and Senate to push for a reversal of the healthcare funding cuts passed last year as part of the One Big Beautiful Bill Act (OBBBA). Rollback of these cuts is the likely condition for passage of additional defence spending. As a result, we see modest fiscal loosening as likely.”