Democrats' Congress Sweep Shakes Stocks, Dollar and AI Bets

Wall Street and the dollar fell on Wednesday after Democrats won control of both chambers of Congress in Tuesday's US midterms, a result markets read as a threat to the AI-spending boom. Gold jumped back above $4,000 an ounce and Treasury yields eased as investors sought safety, while the FTSE 100 had already snapped a four-day winning streak on Tuesday. 

Equities 

The FTSE 100 registered its steepest one-day drop in a month on Tuesday, falling 1.1% to close at 10,638.43 points and snapping four straight sessions of gains. The mid-cap FTSE 250 fell 0.5% to 24,674.91, with investors turning their attention to Thursday's Bank of England rate decision. 

Industrial metal miners led the fallers as copper slid to a multi-week low, dragging down Antofagasta and Glencore. Banks also weakened ahead of the BoE meeting, with HSBC among the biggest drags on the index as investors positioned for the rate decision. 

Primark owner Associated British Foods led the FTSE 100's fallers, slipping after cutting its annual profit forecast. Coca-Cola Europacific Partners also fell after flagging rising cost pressures. 

On the upside, power generator Drax Group jumped after announcing a data-centre partnership with Brookfield Asset Management, and insurer Hiscox rose after reporting a jump in insurance premiums over the first nine months of the year. 

Wall Street notched gains on Tuesday as chip and AI-linked stocks rebounded heading into the midterm results. The S&P 500 rose 0.36% to 7,568.92 and the Nasdaq added 0.83% to 25,372.01, while the Dow Jones Industrial Average slipped 0.38% to 51,787.04 as sectors outside technology lagged. 

Apple fell after warning that rising memory-chip costs would squeeze its holiday-quarter margins. Nvidia, Micron and Microsoft all climbed as investors rotated back into chipmakers, while AMD rose ahead of its results due after the close. 

AMD jumped in after-hours trading after posting stronger-than-expected quarterly sales and guidance pointing to a sharp rise in AI-chip revenue through 2027. Palantir shares dipped even after beating forecasts and raising its own revenue outlook. 

The mood turned sharply overnight once results confirmed Democrats had taken both the Senate and the House, a bigger swing than markets had priced in. US futures fell before paring losses, as investors weighed fears of tighter regulatory scrutiny of AI and technology companies against hopes that political gridlock would leave corporate earnings largely undisturbed. 

Forex & Commodities 

The dollar slid to its weakest level in a month after the midterm result, as investors priced in tighter oversight of the technology sector and a reduced chance of further AI-driven spending. The dollar index fell 0.47% to 101.41. 

Sterling held near $1.35 and the euro traded around $1.12, while the yen and Swiss franc, both often sought as havens, posted the biggest gains against the dollar. The yen strengthened to around 157.5 per dollar, while the Swiss franc firmed to about 0.81. Gold jumped back above $4,000 an ounce, its best day in weeks, as the softer dollar and a rush into safe assets lifted the metal, with silver and platinum also firmer. 

US Treasury yields fell as investors sought the safety of bonds, with political gridlock in Washington seen cutting the chances of further government spending and fresh tax cuts. Oil ticked higher, with Brent crude near $104 a barrel and US crude close to $97, as traders weighed the election result's implications for President Trump's approach to Iran against uncertainty over whether Washington will pursue diplomacy or further military action. 

Oil has swung sharply this week, dropping around 7% on Monday before easing further on Tuesday, as investors tracked talks to end the wars in both Ukraine and Iran. A US strike on an Iranian island last week had briefly revived supply-disruption fears, though prices have since steadied. Eurozone inflation data due later on Wednesday is expected to show price growth picking up to 4% in October from 3.8%, a reading that could complicate the European Central Bank's path on interest rates.