Asian stocks and dollar fall as Democrats gain ground in US midterms
Technology shares led losses in Asia as investors weighed the prospect of tighter AI regulation and political gridlock in Washington. Oil prices also fell.
Asian markets and the US dollar both declined on Wednesday as Democrats made significant gains in the US midterms. By early morning in Europe, Democrats had secured control of the Senate and were on track to gain control of the House of Representatives, marking a major defeat for President Donald Trump and his Republican Party. Voters' concerns over high living costs, particularly fuel prices, and opposition to data centres contributed to the Democratic victories.
Some analysts fear that a Democratic sweep of Congress could result in stricter regulations and restrictions on AI development, potentially impacting the AI boom. A divided federal government may not necessarily bring about the changes that voters desire, as a Democratic-controlled Congress could engage in legislative gridlock, fiscal brinkmanship, and investigations, according to analysts.
However, President Trump has stated he plans to veto Democratic legislation if he loses control of Congress. Analysts warn that a divided government could lead to market uncertainty, with the stock market and the dollar experiencing a decline. European stock indices and the euro weakened against major currencies, while Asian stocks, including Tokyo, Shanghai, and Hong Kong, also fell.
Tech firms faced pressure due to ongoing concerns about the AI investment boom and the uncertain timeline for returns on investments.
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