Macro update
Democrats take control of both chambers in blow to Trump: Democrats secured majorities in the Senate and House, including victories in key Senate races in South Carolina, Texas and Ohio. The result represents a significant setback for President Donald Trump and has raised concerns that tighter regulation could constrain growth in the AI sector.
Asian technology shares rebound after sharp early losses: Chipmakers Samsung, SK Hynix and TSMC suffered steep falls before recovering ground. South Korea’s KOSPI erased its early 3% decline to trade slightly higher, while Japan’s Nikkei closed 1.42% lower at 62,188.63 after falling as much as 4.8%. Trump’s more conciliatory remarks, in which he accepted the election result, encouraged investors to unwind defensive positions.
US and European futures recover as investors reassess political risks: S&P 500 futures were down 0.35%, while Nasdaq futures pared losses of more than 2% to 0.5%. European futures also recovered, falling 0.4% after an earlier 1.5% drop, as investors bet that political gridlock need not undermine corporate earnings.
Treasury prices rise as investors anticipate policy gridlock: The US 10-year Treasury yield fell 6 basis points to 4.906%, with investors expecting a divided Washington to make further tax cuts less likely and constrain government spending. Markets also scaled back expectations of interest rate increases next year.
Dollar weakens as yen, franc and sterling advance: The dollar index fell 0.37% to 101.34, with the yen and Swiss franc leading gains at 157.55 and 0.8144 per dollar, respectively. Sterling strengthened 0.37% to $1.3464 ahead of an expected Bank of England rate increase on Thursday, while gold climbed more than 2% as the greenback weakened.
Crude rebounds as Iran uncertainty and stock draw support prices: Brent rose 0.8% to $104.42 a barrel, while WTI gained 0.5% to $96.59 as traders assessed the implications of the US election for Washington’s next steps in the Iran war. An unexpected 5.27 million-barrel decline in US crude inventories, reported by the API, also supported prices ahead of official EIA figures.