Asian stock markets saw notable divergence following the US midterm elections, as investors shifted away from chip manufacturers. Technology shares in South Korea led the sell-off, while Chinese internet companies experienced strong gains. Expectations that Democratic control of Congress might expedite efforts to end the Iran war pushed oil prices lower, bolstered US Treasury bonds, and weakened the US dollar.
Deep losses in chip stocks, gains for Chinese tech firms
Concerns over potential tighter regulations on US data centers led to sharp declines in the shares of Samsung and SK Hynix, both major South Korean chipmakers. Their stocks fell more than 7%, contributing to a 5.2% drop in South Korea’s Kospi index. Nasdaq 100 futures slipped 1.2%, indicating that pressure on chip stocks could persist during the US trading session.
In contrast, shares of Tencent and Alibaba each surged over 6%, lifting Hong Kong’s Hang Seng Tech Index by 5%. Consumer-focused companies led gains across Asia, with Toyota, Alibaba, and Sony among the top contributors.
Australia’s benchmark index gained 2.5%, and India’s Nifty 50 climbed 1.8%. In Japan, the Nikkei 225 lost 1.6%, while the broader Topix index increased by 1.3%.
| Stock Index / Company | Change (%) |
|---|---|
| Samsung, SK Hynix | -7 |
| Kospi (South Korea) | -5.2 |
| Nasdaq 100 Futures | -1.2 |
| Tencent, Alibaba | +6 |
| Hang Seng Tech (Hong Kong) | +5 |
| Australia ASX | +2.5 |
| India Nifty 50 | +1.8 |
| Japan Nikkei 225 | -1.6 |
| Japan Topix | +1.3 |
Expectations of peace push oil prices lower
Brent crude slipped another 0.7% to $93.94 per barrel, following a drop of over 8% the previous day. Investors anticipated that increased Democratic influence in Congress might help accelerate the end of the Iran war, which has now entered its ninth month. This expectation eased supply concerns and added downward pressure on oil prices.
US Treasury yields fall, dollar weakens
US Treasury bonds extended their gains for a second consecutive day. Alongside the impact of lower oil prices, predictions that potential Democratic-led fiscal policies could curb the Trump administration’s plans for taxes and spending also influenced investor sentiment.
Yields fell by at least 2 basis points across the curve, with the 10-year Treasury yield dropping as much as 5 basis points to 4.84%, its lowest level since September 10. The US dollar weakened against all major G10 currencies except one.
Treasury signals possible changes in borrowing plans
The US Department of the Treasury indicated a shift in its approach to bond sales that have been in place since the beginning of 2024. The possibility of adjusting auction sizes prompted Wall Street strategists to reconsider their borrowing forecasts for next year.
Market makers noted that this guidance could lead to greater issuance of short-term debt instruments and smaller long-term bond offerings.
Mini dictionary: US Department of the Treasury – The federal agency responsible for managing government revenue, overseeing the production of currency, and administering fiscal policy in the United States.
New guidance is expected to open the door for increased short-term borrowing and reduced long-term bond auctions, according to market makers.
Republican Party faces internal divisions after defeat
The Republican Party’s significant losses in the midterm elections highlighted internal divisions. Much of the criticism focused on the White House and created space for potential candidates to begin shaping their platforms ahead of the 2028 presidential race.
Australia may have reached end of its rate hikes
Economists and fund managers suggested that the Reserve Bank of Australia’s recent rate increase could mark the end of its tightening cycle, which has been one of the most aggressive among developed economies this year. These views coincided with reports of tension within the central bank’s rate-setting committee.
Price action following the US elections showed a shift in sector performance rather than a broad market rally. Stricter data center regulations weighed on chipmakers, while falling oil prices supported bonds. However, the decline in oil is currently driven by expectations of a political solution in the Iran conflict, rather than any concrete development.
