Australian futures signalled a jump of 172 points, or 1.9 per cent, at the open after US stocks rallied as midterm results put Democrats on track to control both the House and the Senate.
On Wall Street, the S&P 500 rose 1.8 per cent, the Dow jumped 1524 points or 2.9 per cent by noon Eastern time, and the Nasdaq gained 2.1 per cent, with investors racing to separate the winners from the losers of the vote.
Energy markets reacted strongly: the international benchmark Brent crude plunged 9.2 per cent to US$94.11 a barrel, sliding below US$100 for the first time in nearly a month after earlier spikes linked to the war with Iran.
Political fallout hit some high-profile companies. Shares of Trump Media & Technology Group tumbled 12.2 per cent, Tesla fell 3.4 per cent and SpaceX lost 3 per cent. Concerns about possible increased scrutiny from a Democratic Congress also pressured parts of the artificial intelligence sector.
Chip names were mixed: Nvidia, which has been a heavyweight in the AI rally, dropped 1.3 per cent while Advanced Micro Devices added 1 per cent. Smaller cloud AI infrastructure firm CoreWeave plunged 9.2 per cent, and Alphabet recovered 4.2 per cent after a sharp sell-off earlier in the week.
“Earnings trump elections,” said Brian Jacobsen, chief economic strategist at Annex Wealth Management.
Commentators offered contrasting takes on the political implications for markets. Carsten Brzeski, global chief of macro at ING Bank, warned of a more combative presidency unless priorities change, saying “Trump is not now a lame duck, but an angry duck.” He added an alternative scenario that Trump could become “a tame duck.”
Defence contractors saw steep falls as investors priced a lower chance of continued escalation: Lockheed Martin slid 6.6 per cent, Northrop Grumman dropped 4.6 per cent and General Dynamics fell 2.5 per cent.
Sectors expected to benefit from a Democratic-led Congress enjoyed gains: First Solar jumped 9.4 per cent and Enphase Energy rose 9.8 per cent on hopes of stronger support for renewables, while healthcare names including HCA Healthcare gained 9.8 per cent.
Retailers focused on lower-income shoppers also surged. Dollar Tree climbed 10 per cent on expectations of policies aimed at easing cost-of-living pressures for struggling households.
Bond markets softened in response: the yield on the US 10-year Treasury eased to 4.90 per cent from 4.95 per cent late Tuesday, as investors judged the prospect of divided fiscal outcomes could limit further near-term increases in US borrowing.
Global equity moves were broad. Paris rose 2 per cent, Shanghai added 2.2 per cent and London climbed 1.8 per cent, while Japan’s Nikkei 225 fell 1.4 per cent. The Brent contract has traded between roughly US$70 and US$120 a barrel since just before the war with Iran began.
