U.S. midterm elections threaten markets and defense budget

The upcoming U.S. midterm elections on November 3, 2026, are viewed as a critical test for global financial markets and domestic policy. Investors are closely monitoring potential shifts in national debt policy, artificial intelligence infrastructure, and defense spending.

President Donald Trump has advocated for a significant increase in the U.S. military budget, aiming for approximately $1.5 trillion, a 40% increase. The realization of this expansion depends heavily on whether the Republican Party maintains control of Congress. Current polling suggests a potential Democratic takeover of the House of Representatives and a possible shift in the Senate.

A divided government could create direct opposition to the President's agenda. Analysts from Jefferies note that while a Democratic victory might assist in managing national debt through fiscal adjustments, it could also introduce regulatory hurdles for the construction of data centers, potentially slowing the expansion of AI infrastructure.