Democrats win control of US House in midterm elections, Decision Desk HQ projects
Democrats appeared to ride a wave of voter dissatisfaction driven by cost-of-living concerns exacerbated by an unpopular war in Iran.
US stock futures dipped, Treasuries climbed, and the dollar weakened on Wednesday after Democrats secured early Senate victories, raising speculation that they could seize control of the chamber from President Donald Trump’s Republicans. In North Carolina, former Governor Roy Cooper narrowly beat Republican Michael Whatley, flipping a Republican-held Senate seat and giving Democrats one of the four net gains needed for a majority.
Democrat Jon Ossoff also won re-election in Georgia. Democrats are favored to take the House, while the Senate battle remains closely contested, leaving investors uncertain about the implications for the balance of power in Washington. Charu Chanana, chief investment strategist at Saxo in Singapore, noted that markets are pricing in a stronger-than-expected Democratic performance, which could dampen expectations for additional fiscal stimulus.
Prediction markets showed growing confidence in a Democratic sweep of the US Congress, with over $1.48 billion wagered on the midterm elections. S&P 500 futures fell 0.8%, while Nasdaq futures dropped 1.8%. The yield on the benchmark US 10-year Treasury note declined 6 basis points to 4.906%. The outcome of the Tuesday elections could have far-reaching effects on market-sensitive sectors like AI, fiscal outlook, defense spending, and regulation in healthcare, banking, and cryptocurrencies.
Chanana suggested that the sharper decline in Nasdaq futures reflects concerns that a change in political control might lead to stricter regulation of AI and Big Tech, especially as investors question elevated valuations and rising AI spending. However, lower Treasury yields might eventually offer some relief, so the initial sell-off may not persist.
In currencies, the dollar weakened against major currencies, with the euro gaining 0.4% to $1.1239 and the British pound rising 0.37% to $1.3464, causing the dollar index to fall 0.32% to 101.39. Asian stocks retreated after earlier gains, as investors ignored strong earnings from chipmaker AMD, which seemed to ease some concerns over the sustainability of the AI trade.
The MSCI's Asia-Pacific index outside Japan fell 0.5%, with South Korea's KOSPI down 1.6% and Japan's Nikkei slipping 3% after returning from a holiday. Oil prices were volatile on Wednesday, sliding to a four-week low the previous day as investors weighed the outcomes of peace talks to end the wars in Ukraine and Iran against fears that recent attacks in both conflicts could further disrupt supplies.
The blockade of the critical Strait of Hormuz, which links the Gulf to world markets and previously carried 20% of global oil supplies, has altered energy flows, heightened inflation worries, and disrupted the global rates outlook.
Written by urgent.news from Business Recorder's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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