Overview
- Markets reacted on Wednesday after Democrats won clear majorities in both chambers of Congress, with U.S. and European 10-year sovereign yields falling and the dollar weakening.
- Investors rotated into banks and renewable energy stocks while defence firms were punished because a Democratic Congress lowers the chance of extra military funding and may press for diplomacy.
- Technology and semiconductor shares remained under pressure as traders questioned the near-term profitability of large AI investments and priced in a greater risk of stricter regulation of data centres.
- Oil prices swung around the vote as reports of U.S.-Iran diplomatic signals briefly eased supply fears, a move that helped reduce inflation pressures and supported the drop in sovereign yields.
- Company-level shocks continued to influence markets, most notably Alstom’s profit warning and reduced production guidance, which sent its shares sharply lower and highlighted execution risk for industrials.