Barclays strategists said oil prices and interest rates could have a greater influence on equity markets than the outcome of the November U.S. midterm elections, as global stocks follow a pattern broadly consistent with historical pre-election seasonality.
Strategists led by Emmanuel Cau said the MSCI World had declined around 3% from its summer highs, broadly matching the average pullback historically observed ahead of U.S. midterm elections.
“History suggests not being too negative, as equities tend to recover around mid-October, practically before election day itself,” the strategists wrote.
The historical pattern cited by Barclays describes past market behaviour and does not establish how equities will perform around the 2026 election.
Barclays Expects Limited Market Impact From Election Outcome
Barclays said its public policy analysis viewed a divided government as one possible election outcome, with Democrats better positioned in the House while control of the Senate remained uncertain at the time of the analysis.
The bank also cited congressional polling showing Democrats with an eight-point advantage in general voting intentions and prediction-market pricing that at the time implied a roughly 60% probability of Democrats taking control of both chambers.
Polling represents a snapshot of voter preferences among the surveyed population, while prediction-market prices reflect traders’ expectations and can change before Election Day. Neither determines the eventual election result.
For equities, Barclays strategists said the implications should be “modest in either scenario.”
The team said changes in congressional control could result in greater scrutiny of industries including technology, healthcare and banking, potentially contributing to news-driven market volatility. However, the strategists did not expect this to have a lasting effect on corporate fundamentals.
Oil and Interest Rates Seen as More Significant Variables
Rather than the election itself, Barclays identified oil prices and interest rates as more significant variables for equity markets in the period ahead.
Movements in energy prices can affect inflation and corporate costs, while changes in interest rates and bond yields can influence financing conditions and equity valuations.
Barclays’ assessment represents the bank’s market outlook rather than a prediction of future equity performance. The eventual impact of the midterm elections, oil prices and interest rates will depend on subsequent political, economic and market developments.