Today marks the first major election during Trump's term! The market will receive important data to predict next year's U.S. "midterm" landscape

Today marks the first major electoral test for Trump during his second term, the results of which will provide key data for investors and the market regarding the direction of the American political landscape. From Virginia to California, a series of state and local elections not only serve as a midterm referendum on the current Republican government but also expose deep ideological divides within the Democratic Party. The final outcomes will offer the earliest and strongest clues for predicting the potential direction of the 2026 midterm elections.

Voters are heading to polling stations to make choices for the governors of Virginia and New Jersey, the mayor of New York City, and a key voting proposal in California. These elections unfold against the backdrop of the federal government shutdown entering its sixth week, with issues such as the economy, cost of living, and immigration becoming central points of contention among candidates.

Particularly noteworthy is the New York City mayoral election, where self-identified "democratic socialist" Zohran Mamdani is leading in the polls, prompting concern on Wall Street. Trump has unusually intervened across party lines, supporting independent candidate and former governor Andrew Cuomo, and threatening that if Mamdani is elected, federal funding for New York City could be cut. This dynamic adds new uncertainty to the market.

High voter turnout indicates significant public interest in this election. According to the Associated Press, as of Monday, Virginia has cast over 1.4 million ballots, while New Jersey has surpassed 1.3 million. In New York City, early voting numbers have also exceeded those of previous years, reflecting an unusual intensity for a "non-establishment year" election.

Virginia and New Jersey: A Litmus Test for Both Parties

As a traditional bellwether for midterm elections, the gubernatorial race in Virginia is highly anticipated. Historical data shows that in the past 12 elections, 11 results have favored the opposing party of the White House occupant. This time, former CIA officer and three-term Congresswoman Abigail Spanberger is representing the Democrats and currently leads in the polls against Republican incumbent Lieutenant Governor Winsome Earle-Sears.

According to Bloomberg, Spanberger is focusing her campaign on the state’s economy and the ongoing federal government shutdown, which has left thousands of federal employees in Virginia without pay. Earle-Sears, on the other hand, is continuing the strategy that helped former governor Glenn Youngkin win four years ago, emphasizing issues like immigration and "parental rights."

In New Jersey, Democrats hope to retain the governorship, but Republican support in the state has seen a rebound. Congresswoman, former Navy veteran, and prosecutor Mikie Sherrill will face off against former state legislator Jack Ciattarelli. This matchup is viewed as a key test of whether Trump's political coalition can remain solid even without his candidacy. Ciattarelli has received Trump's endorsement and advocates for tax cuts and lowering energy costs, while Sherrill emphasizes transportation funding and childcare.

The New York City Mayoral Race: A "Route Debate" Captivating Wall Street

The elections in New York City are highlighting the ideological rifts within the Democratic Party. 34-year-old state legislator and self-proclaimed "democratic socialist" Zohran Mamdani is poised to win the mayoral position after defeating former governor Andrew Cuomo in the primary. Mamdani's campaign focuses on issues such as housing costs and economic inequality, and his rise has unsettled Wall Street, exacerbating divisions within the Democratic leadership.

According to Reuters, Trump himself has deeply involved himself in this election. He not only labeled Mamdani as a "communist" and "a complete failure," but also publicly supported Cuomo, who is running as an independent, warning that if Mamdani wins, he "is very likely not to provide federal funding to my beloved first hometown."

In the face of Trump's pressure, Mamdani told voters that voting for Cuomo is equivalent to voting for Trump. This election is not only about the leadership of New York City but is also seen as a crucial decision regarding the direction of the Democratic Party, which could impact its performance in next year's midterm elections.

The Bigger Picture: Redistricting in California and Federal Government Shutdown

In California, Governor Gavin Newsom is testing his political influence through a voting initiative called "Proposition 50." This proposal aims to temporarily suspend the powers of the state independent redistricting commission to draw new congressional district maps favorable to the Democrats. This move is intended to counteract the Republican redistricting efforts in places like Texas, which could potentially add several congressional seats for the GOP. State documents show that Newsom and his allies have raised over $120 million to support this proposal.

For both parties, these "warm-up matches" for the 2026 midterm elections are not only a numerical contest but also a means of conveying information. On the Democratic side, former President Obama has returned to the campaign trail, attempting to frame the election as a check on Trump's power and a referendum on rising prices.

All these elections are taking place under the shadow of a federal government shutdown. According to Bloomberg analysis, the government shutdown caused by federal spending cuts is nearing the longest record in U.S. history, leaving hundreds of thousands of federal employees on standby and slowing the release of economic data. Economists warn that if the deadlock continues, this drag on economic growth could persist throughout the year