The political gridlock in the United States is expected to have a positive effect on US financial markets, but brokers do not believe there will be much impact in New Zealand because too many economic problems remain.
With the Republicans gaining a majority and control of the House of Representatives, the US had a gridlocked Government where each party control one of the two houses in Congress.
The Democrats maintained a majority in the Senate.
"This gridlock means it will be more difficult for either party to push through legislation," Craigs Investment Partners broker Chris Timms said yesterday.
The situation was similar to what followed the Australian elections where the Labor Administration had to rely on the support of independent MPs to push through its legislation.
Markets viewed that as positive.
In New Zealand, the National-led Government relied on the support of other parties to progress its political agenda.
Now, the US was following the same route and it would be difficult to see any major shift in policy direction because neither party had the mandate to force policy through, he said.
The Standard & Poor's 500 was up 2% since the election but with the outcome widely expected, the market could have already priced it in.
The same expectation might be responsible for some of the 16% gain in US markets since September.
"The positive market response may be due to the fact that it is more difficult to push through policy agendas as markets tend to prefer less government policy and spending than more.
"But it is difficult to ascertain exactly how much of the market's recent gain can be attributed to the mid-term election results."
Recent economic data had been slightly better than expected, including Saturday's non-farm payroll figures which at 151,000 jobs, were roughly double expectation.
Also, the Federal Reserve last week announced $US600 billion ($NZ770 billion) in quantitative easing - nicknamed QE2.
In the short-term, there would be no major effects on the New Zealand financial market as it was still seen as the "place to be" as the US and Japan struggled with their economic woes, Mr Timms said.
In general terms, the key Republican agenda was one centred on reducing the deficit, government debt and government spending.
All of which would be received well by the equity markets.
More specifically, the Republicans had indicated they would like to water down President Barack Obama's health-care legislation.
The Bush tax changes, which were due to be repealed, might now be retained, at least in part, he said.
That could mean a continuation of the lower tax rates for higher income earners and the 15% tax rate on dividends rather than the proposed 39%.
The lower dividend tax rate could be positive for the equity market given the growing demand for dividend income from US investors, Mr Timms said.
Financial stocks might also find more support in the wake of a perception that the Government would now be less hostile towards the finance sector.
Energy stocks might also benefit as the Republicans looked to push for a move away from renewable energy policy towards a renewed emphasis on oil exploration and production, he said.
