By Chibuike Oguh and Amanda Cooper
New York ― Global stocks rallied on Wednesday after Democrats seized control of both chambers of Congress in the US midterm elections, providing greater political clarity and reducing the uncertainty that has weighed on markets.
In a major setback to President Donald Trump, Democrats scored sweeping victories in Republican strongholds for the first time in generations. The breadth of the party’s success was underscored by gains in districts long considered safely conservative, highlighting a political shift that may have caught some investors off guard.
On Wall Street, all three main indices were trading higher with communication services, consumer discretionary and technology stocks driving gains. Energy shares were the biggest losers on the day with crude prices down 2% as Trump acknowledged that the Iran war had played a role in his party’s sweeping defeat.
The Dow Jones industrial average rose 2.05%, the S&P 500 was up 1.72% and the Nasdaq Composite gained 2.46%.
“Markets hate uncertainty and even though a lot of what the result was had been priced in ahead of time, getting confirmation of that last night brings certainty to markets,” said Clayton Allison, portfolio manager at Prime Capital Financial. “Now this brings questions as to what actually gets done in Washington over the next two years. But the markets love to see that there is a resolution to a catalyst event.”
Opinion polls have shown Democratic voters favouring more control over AI, and investors expect the Democratic-controlled Congress to apply more scrutiny to the sector.
The pan-European 600 index ended 1.82% higher at 657.40 points, its highest since August 26 and marking its steepest one-day gain since June 12. Lender-focused Spanish benchmark climbed 3%, the most among regional bourses.
The blue-chip FTSE 100 index rose 1.79% to 10,829.21 points, marking its biggest one-day percentage gain since early May; the midcap FTSE 250 climbed 0.98% to a two-month high.
AI stocks in Asia initially led a decline in equity markets before finishing higher overnight. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.33%.
The AI boom has helped propel global markets in recent years, driven by heavy spending from tech giants racing to build data centres and expand computing capacity. That has made investors acutely sensitive to anything that could derail the technology’s rapid expansion.
Advanced Micro Devices rose 1% in early trading after the US chipmaker forecast faster growth through 2027, reassuring investors that demand for AI infrastructure remains strong.
Safe haven bid
Treasuries rallied as investors expect gridlock in Washington to cut government spending, with AI regulation also possibly slowing growth and reducing the need for rate hikes.
The yield on the benchmark US 10-year Treasury note was down 0.44 basis points on the day at 4.95%, having fallen as much as 6 bps to a low of 4.89% overnight, which, in turn, weighed on the dollar.
The broadly weaker dollar left the euro up 0.40% at $1.1234 and the pound up 0.41% at $1.3469.
The yen and the Swiss franc — both safe-haven currencies — also notched gains. The Swiss franc was up 0.35% against the dollar at 0.818 francs. The Japanese yen edged 0.07% higher to 158.61.
Oil prices fell 9% on Wednesday in volatile trading as investors awaited Washington’s next move in the US-Israeli war with Iran after the Republican Party lost control of Congress.
Brent futures dropped $9.27, or 8.9%, to $94.29 a barrel, touching the lowest level since September 4, 4.58pm GMT. US West Texas Intermediate crude futures were down $7.44, or 7.8%, to $88.54.
In cryptocurrencies, bitcoin gained 3.49% to $80,553. Ethereum rose 6.2% to $2,434.83.
Reuters
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