Even if you didn’t stay up all night to watch the results, you know by now that Democrats have won the control of the US Congress – that is, the House of Representatives and the Senate. This development will impact Switzerland in several ways as well.
Though President Donald Trump will still have the veto power over legislative decisions, the landslide victory will give the Democrats – for the first time in years – the power to block laws and other decisions pushed by their Republican counterparts.
While the impact will obviously be felt first and foremost – in the United States, some of the effects of ‘regime’ changes will be felt in Switzerland as well.
These are some of the developments that happened I Switzerland immediately after the election results were announced:
The stocks fell
The Swiss stock market (SMI) closed down 0.40 percent.
This ‘reflex reaction was driven by investors’ fearing political blockages and stricter control of the artificial intelligence (AI) sector.
“For the markets, the question is not just which reforms might be blocked, but whether this new configuration could alter the fiscal outlook, bond yields, and corporate profitability,” said John Plassard, head of investment strategy at the bank Cité Gestion. “The history of U.S. midterm elections shows that financial markets react more to shifts in the economic outlook than to the political makeup of Congress.”
However, if you have money invested in Switzerland’s stock market, don’t worry: the SMI “is already showing signs of resilience and rapid stabilisation, hovering very close to the break-even point following an initial decline,” experts say.
The franc
In the foreign exchange market, the demand for Switzerland’s currency is growing, gaining nearly 1 percent against the US dollar compared to November 3rd.
A dollar is now worth only 0.8135 francs, which is good news for people in Switzerland who want to visit the United States, as their purchasing power there will increase.
It is, however, not so good to US tourists who plan to visit Switzerland because their money will not go very far here.
Trade
Democrats having control of both the Senate and House of representatives is the best possible scenario for Switzerland’s export-oriented economy because Trump will no longer have free rein in pursuing his current trade agenda – including high tariffs and threats of raising them further.
According to Migros Bank economist Santosh Brivio, which party has the legislative control “is particularly significant for Swiss sectors with substantial US business operations, such as pharmaceuticals, mechanical engineering, and watchmaking.”
READ MORE: How could US midterm election results affect Switzerland?
Do the election results affect you as an American living in Switzerland? Let us know in the comments section below.
