Macro update
Wall Street rallies as Democratic victory eases political uncertainty: Democrats secured control of both the Senate and House, helping the S&P 500 rise 1.6% to 7,688.62 and the Dow surge 3% as investors welcomed the prospect of legislative gridlock and less political uncertainty.
AI infrastructure shares slide as regulation fears intensify: Data centre operators Hut 8 and IREN plunged 23% and 11% respectively, while the Philadelphia semiconductor index fell to a six-month low. Microsoft and Amazon, however, gained more than 6% as investors bet a slower AI buildout could favour cash-rich industry heavyweights.
Asian chip stocks suffer heavy losses as tech selloff spreads: South Korea’s KOSPI tumbled almost 6% and Taiwan’s benchmark fell more than 3%, while Japan’s Nikkei lost 1.8% as Advantest and Tokyo Electron slumped 14.7% and 9.4%. The broader Topix bucked the trend, gaining 1.2%, with Toyota jumping 16.7% after raising its profit forecast.
Oil heads for biggest weekly fall since 2020: Brent crude plunged almost 9% overnight and traded around $94 a barrel on Thursday, putting it down about 20% this week. Traders expect a weakened Trump administration to be less inclined to escalate the Iran war.
Dollar slips as Treasury yields fall and sterling strengthens: The dollar index touched its lowest level since 30 September, while the US 10-year yield fell to a two-month low of 4.85%. Sterling approached a seven-week high ahead of an expected Bank of England rate increase, while markets continued to price an 80.7% probability of a Fed hike in December.
Gold extends rally to two-week high as dollar and oil weaken: Spot gold climbed 1.6% to $4,123.71 an ounce after Wednesday’s 3.4% jump, its biggest one-day gain since August. A weaker dollar and lower oil prices helped ease inflation concerns and further supported bullion.