Markets cheer Trump’s defeat, but what does it mean for Argentina?

Although markets had expected the Democratic Party to win the U.S. midterm elections — or, more precisely, for President Donald Trump to suffer a decisive defeat — the scale of the setback caught both supporters and opponents by surprise.

Of the 435 seats in the House of Representatives and the 35 Senate seats contested on Tuesday, Democrats secured 228 seats against 139 for Republicans in the House, a net gain of 25 seats.

In the Senate, Democrats won 54 seats compared with 44 for Republicans, gaining seven seats from the G.O.P. As a result, although some final results are still pending, the opposition has already secured control of both chambers.

Wall Street wasted no time celebrating the surprise outcome, with sharp gains across the three major U.S. stock market indexes: the S&P 500 (+1.7%), Nasdaq (+1.8%), and Dow Jones (+3%).

U.S. Treasury bonds also gained value, with yields — which move inversely to bond prices — falling by as much as 1.2% during the trading session.

In Argentina, analysts are divided over how the result could affect the local market. While Javier Milei’s government is aligned with Trump, the U.S. president’s trade policies have generated international uncertainty that has also affected Argentina.

Why did markets celebrate Trump’s defeat? In its analysis of the results, the research team at brokerage firm Puente identified two main reasons behind the market rally.

The first was “the prospect of slower growth in U.S. government spending,” while the second was the expectation that, faced with an opposition-controlled Congress, the Trump administration would “maintain a hard line on trade and geopolitical issues to counter inflationary pressures.”

Aldo Abram, executive director of the right-leaning Libertad y Progreso Foundation think tank, said: “I’m not surprised that markets reacted positively to Trump’s poor election performance. His impact on U.S. and global economic growth has been very negative.”

He stressed that greater global uncertainty means fewer capital flows, less financing for demand, and slower growth. This particularly affects countries that investors perceive as riskier, “because when global risk increases, investors pull their money out of riskier markets.”

Questions over how Argentina will be affected Abram said that between Argentina’s October 2025 midterm elections and the outbreak of the war in the Middle East, “investment was flowing into Argentina and the economy was growing.”

He argued that rising oil prices increased international risk. They also pushed inflation indicators higher and prompted the Federal Reserve to raise interest rates, creating another external shock for Argentina.

“Frankly, the Trump administration’s policies have been negative for Argentina because they have sustained international uncertainty and made it harder for the country to secure financing,” he said.

Nevertheless, he acknowledged the importance of the $20 billion financial rescue package provided by U.S. Treasury Secretary Scott Bessent last year, which “stopped the pre-election run on the peso.”

That is precisely the issue creating the greatest uncertainty among local investors: whether another U.S. bailout will be available next year, ahead of the presidential election in which Milei will seek reelection.

It is worth recalling that Argentina experienced record dollarization of investment portfolios in 2025, with the Central Bank of Argentina estimating the figure at around $35 billion.

Jorge Ángel Harker, an international markets analyst at brokerage firm Adcap Grupo Financiero, argued that although the Republican defeat introduces uncertainty, he believes concerns are “overblown.”

“The Trump administration used the Exchange Stabilization Fund (ESF), whose use did not require congressional approval. Therefore, the question is less about an immediate legislative constraint and more about the political willingness to repeat that support,” he explained.

Meanwhile, Argentine assets came under renewed pressure. The Merval, Argentina’s benchmark stock market index, fell 4.2% in dollar terms, while the country’s country risk index continued to climb, reaching 852 basis points — its highest reading in 12 months.

“The election result in Washington is a secondary driver compared with domestic factors, with the market focused primarily on economic activity, the legislative agenda, and electoral risk ahead of the 2027 presidential election,” Puente’s report concluded.