Oil prices and the US dollar declined on Wednesday as investors assessed the implications of President Donald Trump’s crushing defeat in the US midterm elections, which saw his Republican Party lose control of Congress.
Gatekeepers News reports that the Democrats secured a landslide victory, gaining control of both chambers of Congress and the power to block legislation, launch investigations into Trump’s administration and frustrate his judicial and senior government appointments.
The election outcome triggered uncertainty across financial markets, with investors weighing the potential implications of a divided government for economic policy.
“Investors are trying to get their heads around what a Democrat landslide means for financial markets,” said Russ Mould, investment director at AJ Bell.
“The big risk is uncertainty around how Trump could act in the coming months following such a result.”
The dollar weakened against major currencies amid concerns that the election result could lead to political gridlock in Washington, particularly after Trump warned that he would become “Mr Veto”.
Technology stocks also declined amid speculation that Democrats could prioritise tighter regulation of artificial intelligence.
However, European equities advanced in Wednesday morning trading, with London, Frankfurt and Paris recording gains of more than one per cent.
Investors largely shrugged off official data showing eurozone inflation had climbed to a three-year high of 4.0 per cent.
The gains followed a broadly positive session across Asian markets, although Tokyo closed lower as technology stocks came under pressure.
Tens of millions of Americans participated in the crucial midterm elections, which were widely viewed as a referendum on the White House amid growing public anger over rising petrol prices, the effects of tariffs and the Iran war.
Chris Weston, an analyst at brokerage firm Pepperstone, said Trump retained “considerable executive authority”, adding that the potential consequences of the election outcome were “far from straightforward”.
Meanwhile, bond yields avoided the volatility witnessed in recent sessions, while gold benefited from its appeal as a safe-haven investment.
Beyond the US election, investors continued to monitor corporate earnings reports for the third quarter.
German automaker BMW announced plans to accelerate its planned job cuts after reporting a decline in third-quarter profit, citing intense competition and weakening demand in China, the world’s largest car market.
Google, meanwhile, disclosed plans to invest $15 billion in Malaysia over the next two years to develop data centres and other infrastructure.
Key market figures at around 11:30 GMT
- London FTSE 100: Up 1.2 per cent at 10,765.27 points.
- Paris CAC 40: Up 1.5 per cent at 8,137.66 points.
- Frankfurt DAX: Up 1.5 per cent at 26,249.32 points.
- Tokyo Nikkei 225: Down 1.4 per cent at 62,188.63 points at close.
- Hong Kong Hang Seng Index: Up 1.7 per cent at 23,919.50 points at close.
- Shanghai Composite: Up 2.2 per cent at 3,686.17 points at close.
- Brent crude: Down 1.2 per cent at $102.36 per barrel.
- West Texas Intermediate: Down 0.8 per cent at $95.42 per barrel.
- Euro/dollar: Up at $1.1243 from $1.1191 on Tuesday.
- Pound/dollar: Up at $1.3475 from $1.3413.
- Dollar/yen: Down at 158.54 yen from 158.75 yen.
- Euro/pound: Up at 83.45 pence from 83.43 pence.
