Republicans’ crushing setback will play out in stock markets, inflation, interest rates and economic growth

Donald Trump’s loss of control of the House of Representatives and the Senate has put the world economy on notice for an unpredictable final two years of his presidential term.

After Democrats swept aside his Republican party in the midterm elections, analysts said the prospect of a highly erratic lame-duck president would have significant implications for financial markets, growth, inflation, government borrowing costs and living standards.