Here's everything you need to know about the US midterm elections

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  • The US mid-term elections take place tonight. Early results are set to filter through in Asian trade starting from 11am tomorrow AEDT.
  • The consensus among analysts is for the Democrats to retake control of the lower house, while the Republicans will keep control of the Senate.
  • This primer has all the key information as US voters prepare to head to the booths.

The US mid-term elections kick off tonight, with early results set to filter through during Asian trade tomorrow.

Political analysts are broadly in agreement about how it will play out. But as has been shown in recent years, the results are anything but predictable.

And unexpected outcomes in the political sphere have certainly had the capacity to move markets.

In view of that, we’ve compiled a quick primer with everything you need to know before the elections kick off.

What’s up for grabs?

Many see the November 6 vote as a referendum on the first two years of the Trump presidency.

But American elections are very different to the way Australia’s political system operate – although there are similarities too.

First up it’s worth noting that Donald Trump is not up for election – the next Presidential election is in November 2020 (thus the name “midterms”)

Like Australia, the American congress has a bicameral national legislature, with a Senate (upper house) and House of Representatives (lower house), but the term cycles are slightly different.

All 435 seats in the lower house and 35 of the 100 seats in the upper house are up for grabs in this vote. The entire House of Reps is re-contested every two years.

The Republicans currently have control of both houses.

Senators serve staggered six-year terms with a third up for re-election every two years. (In Australia, it’s a half-senate election every 3 years on 6-year terms – although Turnbull’s 2016 double dissolution election put every senate seat up for grabs).

Who’s expected to win?

The consensus among political analysts and pollsters is for the Democrats to win back the House, while the Republicans will maintain a majority in the Senate.

The Republican Party’s current majority in the House is 238-193, so the Democrats need to win another 23 seats to re-take control.

The Republican majority in the Senate is a razor-thin 51-49. However, 26 of the 35 seats up for re-election in this year’s mid-terms are held by Democrats, so they need to win two additional seats along with holding onto their existing 26, to gain a majority.

It’s a big ask, but the unknown factor in all this is voter turnout. Four years ago, less than 37% of eligible voters turned up at the ballot box. There’s talk of a record turnout for this midterm, so who’s motivated to show up will make a big difference to the result.

When will the results be known?

The first exit polls from east-coast states will start coming through at around 11am AEDT.

So during the course of Asian trade on Wednesday, markets will get a read on the result — particularly for the House.

Key regions such as Pennsylvania, New Jersey and Florida will offer an early glimpse of the national mood and the ultimate result.

The Senate could take a bit longer. Of the 10 Senate races are shaping up as “battleground” elections, two are on the east coast (Florida and West Virginia). But the majority are in Western states where polls close later.

Market reaction

Predicting how markets react to political events is a very inexact science.

However, for the result deemed to have the highest probability — a Democrat House with a Republican Senate — Westpac said the US dollar and US bond yields “could fall slightly”.

With the resulting political gridlock, “signature legislation would be highly unlikely. But markets should at least take comfort from the prospect of smoother passage of government funding measures and raising the debt ceiling,” Westpac said.

If such a result occurs, analysts from ANZ expect Trump to re-focus oh his foreign policy agenda, which “likely implies a tougher stance on trade”.

Extra details

While Westpac applies an 85% probability to a Democrat-controlled House, Daniel Wilson and Tom Kenny from ANZ aren’t so sure.

Their base-case is the same but they only assign it a 55% probability, citing four key reasons why the Republicans could still win control of both houses.

However, according to Westpac’s analysts the President’s approval rating is a “robust indicator” for winning (or losing) seats in the House.

“Trump is unpopular with an approval rating of 42%; the lowest rating for any president at this stage of their term going back to Truman in the late 1940’s,” they said

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