From last night through this morning, the vote count in the U.S. midterm elections became the biggest variable for global markets, and stock-index futures were first to take a hit.
First, the facts. The U.S. midterm elections were held on November 3, with all 435 seats in the House up for election and 35 Senate seats being contested. To win control of both chambers, Democrats needed a net gain of four seats in the Senate and three in the House. The count started breaking decisively in one direction: in North Carolina, Democrat Roy Cooper defeated Republican Michael Whatley, flipping a Republican Senate seat—the first Senate seat Democrats had taken from Republicans that night. After the win, Democrats were just three seats short of control of the Senate. In Georgia, Democrat Jon Ossoff defeated Trump-backed Mike Collins to win re-election. In Virginia, Democratic Senator Mark Warner also won re-election.
Prediction markets had already priced in the outcome. On Kalshi, the prediction market, the probability of Democrats taking control of the Senate rose to around 90%, and the probability of their taking the House reached about 97%. Put simply, traders are now betting on a “blue wave”—a Democratic landslide.
The market reaction was swift and direct. Stock-index futures are contracts that can be traded overnight, effectively a “dress rehearsal” for the opening bell, and they best reflect investors’ initial reaction. During the count, Nasdaq 100 futures fell about 2% at one point, with E-mini futures hitting a low of 27,815, down about 2.1%, wiping out all of their earlier gains. S&P 500 futures fell between about 0.6% and 1.1%, while Dow Jones Industrial Average futures dropped about 367 points, or roughly 0.7%. At around 10 a.m. Beijing time this morning, S&P 500 futures were down 0.53%, Dow Jones Industrial Average futures were down 0.88%, and Nasdaq 100 futures were down 1.63%.
Currency and bond markets moved in the same direction. The U.S. Dollar Index fell below 101.50 in early Asian trading, reaching around 101.25. The 10-year U.S. Treasury yield fell 6 basis points to 4.90%, while the 2-year yield fell 5 basis points to 4.566%. One basis point equals 0.01%, so a 6-basis-point drop in yield is a decline of 0.06%. A rates strategist at Nomura Holdings put it plainly: a blue-wave scenario is generally seen as bearish for the dollar and bullish for U.S. Treasuries, and early Asian trading was consistent with that view.
The chain of events is actually quite clear. The market isn’t afraid of who wins, but of what might happen if “Democrats sweep both chambers”: the Trump administration’s push to build AI data centers could be stymied, and regulation of the AI industry could tighten. JPMorgan had previously warned that a Democratic sweep of both chambers could weigh on the broader market on Wednesday, with AI stocks particularly vulnerable. Conversely, if Republicans hold on to the Senate or both chambers, that could prompt a short-term rally. That’s why Nasdaq 100 futures—where technology and AI stocks are concentrated—fell the hardest. Meanwhile, solar exchange-traded funds continued to rise after hours, as clean energy is seen as a relative beneficiary of a blue wave.
But there are three reasons to view this sell-off calmly. First, overnight futures liquidity is thin, so early moves can easily be amplified. The count has only just begun, and control of both chambers is still undecided; it’s too early to treat the overnight losses as the final verdict. Second, during the regular session on November 3, the S&P 500 rose just 0.36% to close at 7,568.92, while the Nasdaq Composite gained 0.83% to close at 25,372.01. Both ended a three-session losing streak, and the market was already on the road to recovering from oversold conditions. If Democrats ultimately win the House but fail to take the Senate, tonight’s losses could well be absorbed as a buying opportunity. Third, the real suspense lies with the remaining key seats: Senate seats in Michigan, Maine, Ohio, Kansas, Texas, Iowa and Alaska, as well as in slow-counting states such as California, Pennsylvania and Wisconsin. Results in closely contested races could take until Wednesday or even longer.
There are three things to watch tonight: first, which party controls each chamber, with the Senate the decisive battleground; second, the U.S. Treasury’s refunding announcement, as the market faces $618 billion in Treasury issuance in the fourth quarter; and third, Friday’s October nonfarm payrolls report. Elections are about sentiment; earnings and economic data are the real scales.
There are risks to keep in mind, too. The longer the count drags on, the higher the uncertainty premium and the harder it will be for volatility to subside. If Democrats do sweep both chambers, the valuation logic for AI stocks will need to be reassessed, and data-center capital spending—the year’s strongest investment theme—will be the first thing to be repriced. Conversely, if Republicans hold the Senate, tonight’s drop in futures could quickly narrow after the opening bell, leaving those who chased the sell-off caught on the wrong foot.
In a word: on election night, markets are betting on probabilities, not outcomes. Let the dust settle.
#美国中期选举 #USStocks
First, the facts. The U.S. midterm elections were held on November 3, with all 435 seats in the House up for election and 35 Senate seats being contested. To win control of both chambers, Democrats needed a net gain of four seats in the Senate and three in the House. The count started breaking decisively in one direction: in North Carolina, Democrat Roy Cooper defeated Republican Michael Whatley, flipping a Republican Senate seat—the first Senate seat Democrats had taken from Republicans that night. After the win, Democrats were just three seats short of control of the Senate. In Georgia, Democrat Jon Ossoff defeated Trump-backed Mike Collins to win re-election. In Virginia, Democratic Senator Mark Warner also won re-election.
Prediction markets had already priced in the outcome. On Kalshi, the prediction market, the probability of Democrats taking control of the Senate rose to around 90%, and the probability of their taking the House reached about 97%. Put simply, traders are now betting on a “blue wave”—a Democratic landslide.
The market reaction was swift and direct. Stock-index futures are contracts that can be traded overnight, effectively a “dress rehearsal” for the opening bell, and they best reflect investors’ initial reaction. During the count, Nasdaq 100 futures fell about 2% at one point, with E-mini futures hitting a low of 27,815, down about 2.1%, wiping out all of their earlier gains. S&P 500 futures fell between about 0.6% and 1.1%, while Dow Jones Industrial Average futures dropped about 367 points, or roughly 0.7%. At around 10 a.m. Beijing time this morning, S&P 500 futures were down 0.53%, Dow Jones Industrial Average futures were down 0.88%, and Nasdaq 100 futures were down 1.63%.
Currency and bond markets moved in the same direction. The U.S. Dollar Index fell below 101.50 in early Asian trading, reaching around 101.25. The 10-year U.S. Treasury yield fell 6 basis points to 4.90%, while the 2-year yield fell 5 basis points to 4.566%. One basis point equals 0.01%, so a 6-basis-point drop in yield is a decline of 0.06%. A rates strategist at Nomura Holdings put it plainly: a blue-wave scenario is generally seen as bearish for the dollar and bullish for U.S. Treasuries, and early Asian trading was consistent with that view.
The chain of events is actually quite clear. The market isn’t afraid of who wins, but of what might happen if “Democrats sweep both chambers”: the Trump administration’s push to build AI data centers could be stymied, and regulation of the AI industry could tighten. JPMorgan had previously warned that a Democratic sweep of both chambers could weigh on the broader market on Wednesday, with AI stocks particularly vulnerable. Conversely, if Republicans hold on to the Senate or both chambers, that could prompt a short-term rally. That’s why Nasdaq 100 futures—where technology and AI stocks are concentrated—fell the hardest. Meanwhile, solar exchange-traded funds continued to rise after hours, as clean energy is seen as a relative beneficiary of a blue wave.
But there are three reasons to view this sell-off calmly. First, overnight futures liquidity is thin, so early moves can easily be amplified. The count has only just begun, and control of both chambers is still undecided; it’s too early to treat the overnight losses as the final verdict. Second, during the regular session on November 3, the S&P 500 rose just 0.36% to close at 7,568.92, while the Nasdaq Composite gained 0.83% to close at 25,372.01. Both ended a three-session losing streak, and the market was already on the road to recovering from oversold conditions. If Democrats ultimately win the House but fail to take the Senate, tonight’s losses could well be absorbed as a buying opportunity. Third, the real suspense lies with the remaining key seats: Senate seats in Michigan, Maine, Ohio, Kansas, Texas, Iowa and Alaska, as well as in slow-counting states such as California, Pennsylvania and Wisconsin. Results in closely contested races could take until Wednesday or even longer.
There are three things to watch tonight: first, which party controls each chamber, with the Senate the decisive battleground; second, the U.S. Treasury’s refunding announcement, as the market faces $618 billion in Treasury issuance in the fourth quarter; and third, Friday’s October nonfarm payrolls report. Elections are about sentiment; earnings and economic data are the real scales.
There are risks to keep in mind, too. The longer the count drags on, the higher the uncertainty premium and the harder it will be for volatility to subside. If Democrats do sweep both chambers, the valuation logic for AI stocks will need to be reassessed, and data-center capital spending—the year’s strongest investment theme—will be the first thing to be repriced. Conversely, if Republicans hold the Senate, tonight’s drop in futures could quickly narrow after the opening bell, leaving those who chased the sell-off caught on the wrong foot.
In a word: on election night, markets are betting on probabilities, not outcomes. Let the dust settle.
#美国中期选举 #USStocks