Headlines:
- US midterms 2026: Who would’ve thought that a war would be a bad idea?
- US futures continue to trim losses after early beatdown but AI worries linger
- Macro pulse: What if good news for stocks turns into bad news for the bond market?
- Nasdaq futures slide after Trump’s midterm setback. AMD and Arista are telling a different story.
- European stocks rebound in the opening hour as US futures erase steep early losses
- Gold surges past $4,000 as US midterm fallout shakes up markets
- Why the Democrats’ victory in the US midterm elections is driving gold higher and what to watch next
- Crude oil consolidates amid conflicting reports on US-Iran negotiations as escalation risk rises
- Eurozone inflation hits 4% for first time since 2023, piling pressure on ECB
- How will central banks wrap up the year?
Markets:
- NZD leads, USD lags on the day
- Gold up 3.0% to $4,046
- 10-year Treasury yields down 3.5 bps to 4.915%
- WTI crude oil down 1.4% to $94.65
- European indices surge higher; S&P 500 futures +1.0%
- Bitcoin up 0.4% to $78,141
The US midterm elections went about as straightforward as it could. There were early signs that Democrats were going to pull off a complete sweep and it didn’t take long before markets took that narrative and it played out without a hitch whatsoever.
They won both chambers of Congress, delivering a blow to the Republican governane in Washington. US president Trump tried to play things down by saying that he “could collaborate with Democrats on many issues” but resigned to defeat in saying that he will “accept the election outcome”.
The initial market reaction was a wave of dollar selling alongside a rout in tech shares. The latter was the interesting bit as it tied to the fervently anti-AI and anti-data centre campaigning going into the midterms. As such, Nasdaq futures fell by over 2% earlier in the day.
But as we slowly progressed through European trading, US futures slowly pared losses and completed a stunning turnaround ahead of the Wall Street open later. S&P 500 futures are now up 1.0% with Nasdaq futures up by 0.4% on the day. What a comeback.
The dollar wasn’t able to mirror that form though, as it struggled through the session. EUR/USD is up 0.6% to 1.1260 with AUD/USD also climbing by 0.6% to 0.7010 on the day.
With the greenback keeping weaker, gold took full advantage as the precious metal climbed by 3% to hang around $4,030-40 levels for the most part during the session. That comes amid the better risk mood with European shares also pushing solid gains and oil prices also easing off, with the bond market keeping more to the sidelines today.
For now, all eyes will be on whether Wall Street can maintain the optimistic turn in equities from European trading. If that fails to hold, I fear we could return back to the agenda from before the midterms. That being markets focusing back on AI worries with inflation fears also moving back into the spotlight.
In that lieu, a lot will hinge on what Trump decides to do next on the war against Iran. Will he take the election setback as a reason to pursue a diplomatic resolution? Or will he double down on military action? How that plays out will have very different consequences for markets. So, keep your eyes out on that if anything else.
This article was written by Justin Low at investinglive.com.