Stocks and Dollar Drop as Democrats Enjoy Big Early Wins
Prediction markets priced a 99% chance of a Democratic House win and a 95% chance of a Senate win, traders said.
- On Wednesday, US equity-index futures and the dollar weakened as early midterm vote counts and prediction markets signaled a potential Democratic sweep, raising investor concerns about political gridlock in Washington.
- Prediction markets including Kalshi and Polymarket price a 99% probability of Democrats taking the House and a 95% chance of winning the Senate, suggesting a potential 'blue wave' outcome.
- S&P 500 futures fell 0.6% and Nasdaq 100 contracts declined 1.3% as analysts noted divided government suggests less fiscal spending. "Divided government just speaks to less fiscal spending," said Brij Khurana, portfolio manager at Wellington Management.
- Democratic Senator Jon Ossoff is projected to win reelection in Georgia, a key Democratic gain. President Donald Trump threatened Tuesday to be "Mr Veto" and block any Democratic legislation if they win.
- A potential Democratic victory could deal a blow to Trump's agenda for his final two years in the White House. A 'commanding' win might force markets to rethink the political trajectory into 2028.
15 Articles
15 Articles
US midterm elections: Early Democratic wins rattle Wall Street
Early Democratic victories in key US Senate races have raised expectations of a potential shift in control of Congress, although the final outcome remains uncertain. The emerging results triggered a sharp reaction across financial markets, with US stock futures falling, Treasury yields declining and the dollar weakening as investors assessed the implications of a possible Democratic sweep.
The US midterm elections, which produced better-than-expected Democratic results, weakened the dollar on Wednesday, stock futures fell, while demand in the government bond market picked up. Based on the picture of the states decided so far, Democrats are winning majorities in both houses of Congress, which is a serious political blow to President Donald Trump and the Republicans.
Gold prices rose and the dollar index fell as initial results from the US midterm elections showed Democrats gaining power in both houses of Congress. Selling pressure intensified on Wall Street, with technology and AI stocks declining.
The clear victory of the democrats fuels fears of slower AI expansion. In Japan, investors react with sales – and losses are also evident on the US stock exchanges.
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