Asian stocks were poised to follow Wall Street higher after a Democratic sweep in the US midterm elections sent oil plunging on hopes the monthslong conflict with Iran may end sooner. Equity-index futures for Japan, Australia and Hong Kong pointed higher following the biggest gain for the S&P 500 since August. Futures for South Korea's tech-heavy Kospi index edged lower, tracking losses in US chip stocks amid concerns over the future of data-center development.
The Nasdaq 100 Index rose 0.9%, propelled by gains of over 5% each in Microsoft Corp., Amazon.com Inc. and Apple Inc. Brent crude sank over 8% to below $95 a barrel, with Senate Minority Leader Chuck Schumer pledging to end the war, saying some Republicans would back the effort. Treasury yields dropped across the curve on Wednesday, as traders trimmed bets on Federal Reserve interest-rate hikes over the coming year. The dollar weakened the most in two months.
The market rally signals that investors are willing to look past a potential policy gridlock in Washington after Democrats wrested control of both chambers of the US Congress. The gain in Treasuries on oil's slump and speculation that the so-called blue wave would limit President Donald Trump's ability to add to the deficit is also seen as supporting stocks. Louis Navellier, chief investment officer at Navellier & Associates, said the stock market is now celebrating congressional gridlock. Scott Rubner, head of equity and equity derivatives strategy at Citadel Securities, said US stocks are set for gains into year-end. Keith Lerner at Truist Advisory Services Inc. noted that stocks have been higher one year after every midterm vote since 1946.
While Democrats could complicate data-center development in some states, many investors see little immediate threat to the AI investment theme that has powered a rally in stocks tied to the sector. Ulrike Hoffmann-Burchardi at UBS Global Wealth Management said greater congressional oversight will not necessarily derail the AI investment cycle as underlying demand is still solid. Ryan Detrick at Carson Group said markets hate uncertainty and, with the election out of the way, buyers are stepping in across the board.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing