London pre-open: Stocks to fall as Democrats win control of House and Senate

(Sharecast News) - London stocks were set to fall at the open on Wednesday as investors mulled news that Democrats have won the Senate and the House in the US midterm elections.

The FTSE 100 was called to open around 43 points lower.

Danske Bank said the market reaction to the US midterms has been risk off, "with the move appearing to be driven less by a higher political risk premium and more by renewed concerns around the AI and data centre investment buildout".

"We do not expect the election result to significantly alter the fiscal policy outlook," it said. "US fiscal policy will effectively be locked until the next president, as Republicans cannot pass further deficit-widening reconciliation bills and Trump can veto budget bills from a Democratic-controlled Congress."

Holger Schmieding, chief economist at Berenberg, said the scale of the swing against Trump and his MAGA movement exceeds expectations.

"For domestic legislation, losing Congress turns Trump into a lame duck for the two final years of his second term, like most recent US presidents have been before him. Trump could probably still veto legislative initiative of the Democrats. But the scale of the losses for MAGA may loosen Trump's control over the Republican party and possibly pave the way for more bipartisan co-operation.

"A key issue now is whether the Democrats move to the left or focus on the centre to win the big election in 2028. In parts of financial markets, the size of the swing against Republicans could raise concerns about more regulation to come. However, I would put that issue into context. That US voters have rejected Trump and his somewhat authoritarian penchant for crony capitalism shows that US institutions and its checks and balances work. That is a positive, in my view."

In UK corporate news, Marks & Spencer posted a surge in half-year profits as the high street retailer rebounded from 2025's devastating cyber attack.

Sales in the 26 weeks to 26 September jumped 16.2% to £9.26bn, while adjusted pre-tax profits soared to £403.2m from £184.1m a year previously.

However, on a two-year basis, profits remained below 2024/25's interim income of £413.1m, as strong demand for M&S's food offering failed to offset weaker conditions in clothing.

Medical technology group Smith & Nephew cut its full-year guidance due to weaker-than-expected growth in its US Orthopaedics business. The company now expects underlying revenue growth of around 3%, down from 4% previously, while trading profit growth guidance was cut to 4% from 8%.

The downgrade came as S&N reported a 3.4% increase in third-quarter revenues to $1.55bn, driven by strong demand in Sports Medicine and an improved performance in Advanced Wound Management.

Pub chain JD Wetherspoon said that like-for-like sales rose 8.2% in the first 14 weeks of the financial year, with total sales up 9.1%, as the group continued to outperform the wider hospitality sector.

Bar sales increased 9.4%, food sales rose 6.8%, and slot and fruit machine revenues were 7.1% higher, outweighing a 1.4% decline in hotel room sales. Wetherspoons said recent trading remained robust, although growth eased slightly to 7.5% in the most recent five weeks from 8.6% in the first nine weeks of the period. Net debt stood at £736m at the end of the quarter, down from £756m a year earlier.