US President Donald Trump accepted the victory of the Democrats in both chambers of Congress, leading to a notable decrease in election-related uncertainty in global markets. US stock index futures initially moved lower but later rebounded, while European equities advanced. By contrast, Asian markets saw only limited changes.
Sustained rally in artificial intelligence stocks
The S&P 500 futures reversed their early losses and climbed 1.1%. Buying activity returned to artificial intelligence stocks, boosting Nasdaq 100 futures sharply upward after recent declines. However, shares linked to Tesla and SpaceX fell following Democratic wins in the Senate and the Texas governor’s race.
Democrats’ success in regions traditionally held by Republicans has strengthened expectations that Trump will encounter more resistance in Congress than during the first two years of his presidency. Trump remarked that, if necessary, he is willing to work with a House of Representatives and Senate controlled by the opposition.
Dollar and bond yields drop
The yield on the US 10-year Treasury note slipped 3 basis points to 4.93%. The US dollar weakened against all major currencies, experiencing its steepest single-day decline since September. The New Zealand dollar recorded the largest gain against the greenback, rising 0.7%. The euro and Swiss franc also advanced by 0.4%.
Movements in bond and currency markets reflect expectations that Democratic control of Congress will likely limit fiscal expansion and ease concerns about federal government borrowing. Lower bond yields and continued confidence in the US economy’s resilience have supported the stock market recovery.
Despite the positive momentum in the equities market following the election, sectoral impacts were mixed. Diminished bond yields and renewed demand for artificial intelligence stocks propelled the Nasdaq 100 futures, whereas Tesla and SpaceX-linked shares failed to participate in the broader technology rally.
| Asset | Movement | Notable Change |
|---|---|---|
| S&P 500 Futures | Up | +1.1% |
| Nasdaq 100 Futures | Up | Sharp rise |
| Tesla/SpaceX-linked shares | Down | Declined post-election |
| US 10-year Yield | Down | 4.93% (-3bp) |
| US Dollar Index | Down | Biggest drop since September |
| NZD/USD | Up | +0.7% |
| EUR, CHF vs. USD | Up | +0.4% |
