- Oil prices and the dollar fell after Democrats won control of both chambers of Congress in the US midterm elections.
- European stocks advanced, while investors assessed potential policy changes, corporate earnings and continuing economic uncertainty.
Oil prices and the US dollar fell on Wednesday after President Donald Trump’s Republican Party lost control of Congress, Channels Television reports.
Democrats secured majorities in both chambers following a landslide midterm victory. The result gives them power to block legislation and investigate Trump’s administration. They can also obstruct his judicial and senior government appointments.
“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 as investors considered the risk of political gridlock. Trump had warned that he would become “Mr Veto”.
Technology stocks also declined amid concerns that Democrats could prioritise artificial intelligence regulation. However, major European stock markets advanced during Wednesday morning trading. London, Frankfurt and Paris each gained more than one per cent.
Investors largely overlooked official figures showing eurozone inflation had reached a three-year high of 4.0 per cent.
Asian equities also recorded broadly positive sessions. Tokyo’s market ended lower as technology stocks struggled.
Millions of Americans voted in the closely watched midterm elections. Voters faced growing concerns over rising petrol prices, tariffs and the Iran war as the polls served as a referendum on the White House.
Chris Weston, an analyst at Pepperstone, said Trump retained “considerable executive authority”. He added that the election’s potential impact was “far from straightforward”.
However, bond yields remained relatively stable despite recent volatility. Gold also gained support from its safe-haven appeal.
Corporate Earnings Influence Market Sentiment
Investors also monitored third-quarter corporate earnings reports.
BMW announced plans to increase its proposed job cuts after reporting lower third-quarter profits. The automaker cited intense competition and weaker demand in China.
Meanwhile, Google plans to invest $15 billion in Malaysia over two years. The investment will fund data centres and other infrastructure.
Market Figures at 11:30 GMT
- London FTSE 100: Rose 1.2% to 10,765.27 points.
- Paris CAC 40: Gained 1.5% to 8,137.66 points.
- Frankfurt DAX: Advanced 1.5% to 26,249.32 points.
- Tokyo Nikkei 225: Fell 1.4% to 62,188.63 points at close.
- Hong Kong Hang Seng: Rose 1.7% to 23,919.50 points at close.
- Shanghai Composite: Gained 2.2% to 3,686.17 points at close.
- Brent crude: Fell 1.2% to $102.36 per barrel.
- West Texas Intermediate: Dropped 0.8% to $95.42 per barrel.
- Euro/dollar: Rose to $1.1243 from $1.1191 on Tuesday.
- Pound/dollar: Increased to $1.3475 from $1.3413.
- Dollar/yen: Fell to 158.54 yen from 158.75 yen.
- Euro/pound: Rose to 83.45 pence from 83.43 pence.