What the Midterm Sell-Off Does and Does Not Tell Advisors

The US midterm elections dominated a turbulent week to 6 November 2026, as the Democrats won control of both the House of Representatives and the Senate. Markets first welcomed the result, with the Dow rising about 3% on Wednesday and the S&P 500 and Nasdaq each gaining 1.5%. That relief faded quickly as investors weighed which sectors might gain or lose under the new political balance. By the end of the week, the S&P 500 had fallen 2.68%. Energy fell almost 12% and information technology nearly 7%, while five sectors, led by consumer discretionary, finished higher.

Expectations, not policy

Semiconductor shares were at the centre of Thursday’s sell-off, on concern that the result could slow data-centre construction and bring tougher oversight of AI. Friday brought a partial recovery, with the semiconductor index regaining about a third of Thursday’s loss. It is worth being clear that these were market expectations, not enacted policies. The result changed the outlook for regulation and public spending, but it did not change company earnings overnight. Investors were reassessing growth expectations and the prices they are willing to pay, rather than reaching a verdict on AI’s long-term value.

Oil falls, but supply risk remains

Hopes that the result might encourage a settlement of the US-Iran war drove a steep fall in oil prices. Brent settled at $98.32 a barrel and US crude at $90.83, weekly falls of 17% and 13% respectively, according to Reuters. However, no peace agreement had been confirmed by Friday, and attacks on shipping around the Gulf and the Strait of Hormuz kept supply risks firmly in view. Cheaper oil eases pressure on household and business costs, but markets cannot yet assume energy supplies are returning to normal.

Jobs strengthen the case for higher rates

The US added 165,000 jobs in October, with unemployment at 4.1%, although the number working part-time because they could not find more hours rose to 4.8 million. Stronger hiring reinforced expectations of a Federal Reserve rate rise in December, which money markets now price at a 90% probability. A healthier economy supports the earnings outlook, but higher borrowing costs remain a headwind for share prices.

The UK raises rates

The Bank of England raised interest rates by a quarter of a percentage point to 4% on Thursday, with one of nine policymakers favouring a larger rise. Inflation reached 3.5% in September, and the Bank forecasts it could approach 5% by mid-2027, largely because of energy costs. The FTSE 100 fell 0.5% over the week, with telecoms, energy and traditionally defensive sectors all weakening, while Lloyds reported that house prices fell at their fastest annual pace in a year in October.

What this means for portfolio construction

A week like this shows how quickly a political result can be priced one way and then another, and how far sector performance can diverge. Energy and technology fell sharply while other sectors rose, a reminder that client outcomes depend as much on what a portfolio holds as on the direction of the market.

 

TEAM’s UCITS funds, across the Multi Asset Growth, Balanced and Conservative strategies, spread exposure across asset classes, regions and sectors, so that the client’s outcome does not depend on how one sector reacts to a single political event.

 

Structured Notes allow advisers to link a defined payoff to the performance of an index or basket, with features such as capital protection or enhanced income set at the outset. That gives clients a known framework when political news moves markets one way and then the other within days. Because a Structured Note is an obligation of its issuer, advisers should also weigh issuer credit quality and consider spreading exposure across issuers where appropriate.

The conversation worth having now

This week’s US inflation data and the first estimate of UK third-quarter GDP on Thursday 12 November will shape the outlook for both the Federal Reserve and the Bank of England. Advisers may find it useful to look at how concentrated each client’s portfolio is in technology and energy, how bond and cash holdings are positioned as rates rise in both the US and the UK, and whether portfolios are built to absorb policy surprises rather than bet on them.

 

Source: TEAM Asset Management Weekly Commentary – 09th November 2026