How markets reacted to Democrats’ win in US midterms: Stocks U-turn, gold gains

Published Wed, Nov 4, 2026 · 08:01 PM

[DUBAI] Global stock markets erased a sell-off sparked by a Democratic sweep of the US Congress, as uncertainty surrounding the midterms faded and dip-buyers rushed back into a bruised market.

Equities reversed earlier losses, trading firmly in the green, while Treasuries rallied with gold. Investors are reassured the results are not likely to swiftly change the status quo, with opportunities opening up in different parts of the market which had sold off recently, like technology.

US President Donald Trump congratulated Democrats for doing “a good job” after they inflicted devastating losses on his Republican allies, winning back both houses of Congress and picking up several governors’ mansions.

“While the present uncertainty and changing of the guard might make investors anxious, no US midterm election has ended the world, and this one will not either,” said Steven Chiavarone, chief investment officer for Global Equities at Federated Hermes.

“We are looking past the noise, focusing on the real opportunities due to strong economic growth, significant infrastructure build-out and what may be the earnings cycle of our lifetime.”

Here is a look at how markets reacted to the election results:

US stock futures have turned positive as some of the biggest risk events facing markets move into the rearview: a US Federal Reserve decision that left rates unchanged, an earnings season that delivered strong growth despite concerns over artificial intelligence capex and midterm elections that are unfolding in an orderly fashion.

Technology stocks in particular were sold off heavily in the lead up to the vote as concerns about overspending on AI grew.

The Nasdaq 100 entered a correction on Monday, but contracts on the tech-heavy benchmark erased losses of as much as 2.4 per cent to advance 0.9 per cent.

European stocks extended their recent outperformance, with the Stoxx 600 advancing more than 1 per cent. The benchmark had beat the S&P 500 in October as investors rotated out of the AI trade and into more defensive sectors.

In Asia, the Kospi Index erased a drop of as much as 4 per cent on Wednesday, with Samsung Electronics and SK Hynix down less than 1 per cent each. Taiwan’s Taiex Index also trimmed its drop to 0.8 per cent.

There were pockets of underperformance, however.

Defence stocks were hit as investors revised down their bets on a further ramp-up in military spending. The shares of Republican mega-donor Elon Musk’s Tesla and Space Exploration Technologies declined about 3.5 per cent each ahead of Wednesday’s open. 

Renewables rally

Renewable stocks rallied in Asia, Europe and US pre-market as investors see a Democratic wave as supportive of companies in the clean energy supply chain, including solar and batteries, at the expense of the traditional energy sector.

Denmark’s Orsted, an operator of offshore wind farms, and SMA Solar Technology both rose more than 8 per cent. Vestas Wind Systems also advanced about 5 per cent in early European trading.

In Asia, South Korea’s Hanwha Solutions surged 19 per cent, while HD Hyundai Energy Solutions and OCI Holdings jumped 12 per cent and 10 per cent, respectively.

Solar names in the US, such as Enphase Energy, SolarEdge Technologies, First Solar and Sunrun advanced in pre-market trading.

Among other sectors, banks soared in Europe as investors rotated back into a favoured trade, while basic resources stocks rallied with metal prices.

US dollar, treasuries

The US dollar slid against all G10 peers on concerns that a Democratic sweep could chip away at the US exceptionalism story, particularly if greater scrutiny of AI investment weighs on growth. A Bloomberg gauge of the greenback fell as much as 0.5 per cent, the most in two months.

Treasuries gained, with yields falling across the curve as investors bet a Democratic Congress could constrain Trump’s tax and spending agenda, reducing the prospect of fiscal stimulus and additional borrowing. 

Five-year yields dropped as much as nine basis points (bps) to 4.67 per cent, while the 10-year yield fell seven bps to 4.89 per cent before paring the decline.

European government bonds rose, although not to the extent seen in Treasuries.

German 10-year yields fell one bps to 3.32 per cent, while their UK peers dropped three bps to 5.23 per cent. The premium on French debt over German counterparts – a gauge of risk in the region – slid four bps to 158 bps.

The euro gained 0.5 per cent versus the US dollar to 1.1253 while the pound fared slightly better, climbing 0.6 per cent to 1.3489.

Crypto

Cryptocurrencies were mixed as the results cast doubt over the path for industry-backed legislation.

Trump has been a vocal supporter of the sector, pledging to make the US the “crypto capital of the world”, establish a strategic Bitcoin reserve and ease regulatory pressure – fostering a friendlier environment for digital assets.

Bitcoin fell as much as 2.8 per cent to below US$76,000 as election results came in before rebounding.

Crypto was already under pressure from outflows from Bitcoin spot exchange-traded funds and the fallout from last week’s record Binance hack.

Gold rallies

Gold jumped as much as 3.1 per cent in the biggest gain since August as the US dollar and Treasury yields fell.

Lower yields benefit gold as it does not pay interest, while a weaker US currency makes the metal more affordable for most buyers.  

Bullion traders are assessing whether the strong Democratic showing could constrain Trump’s fiscal agenda and curb expectations for further spending. Prices rose to above US$4,000 an ounce, erasing a modest retreat in the previous session. BLOOMBERG