US stock index futures stabilized on Wednesday, after a sharp decline in early trading, as investors evaluated the broad gains achieved by Democrats in the midterm elections and their control of the Senate and House of Representatives.
Democrats made gains in traditional strongholds of the Republican Party, and in states that had not witnessed similar transformations in generations, in results that, according to Reuters, reflected widespread rejection of President Donald Trump’s policies, amid the participation of tens of millions of voters.
These results pave the way for a new phase of political division in Washington, after two years during which Congress, which was controlled by Republicans, rarely used its powers to limit Trump's powers.
Global stocks oscillated between gains and losses, as investors evaluated the possibilities of tightening regulatory restrictions, increasing taxes, and oversight of sectors and fields, including artificial intelligence and cryptocurrencies.
Aidan Yao, chief investment strategist for the Asia region at the Amundi Investment Institute, said that the importance of the current midterm elections goes beyond being a referendum on Trump, to being close to being a referendum on artificial intelligence. He added that imposing restrictions on this sector may make the prospects for the US economy, inflation, and monetary policy very uncertain.
In Europe, shares of giant technology companies, including Amazon, Alphabet, Microsoft, and Meta Platforms, fell during trading on the Tradegate platform. The shares of SpaceX, owned by Elon Musk, also fell by more than 4 percent.
Democrats made progress in the states of Texas and Georgia, which represent two major centers for data center investments. As construction of these centers expands rapidly, Americans are increasingly concerned about their environmental impact, the pressures they may place on energy costs, as well as concerns about the technology itself.
This comes at a time when investment in artificial intelligence stocks has been under pressure recently, with investors becoming increasingly cautious about the huge spending of major technology companies on this technology, in light of limited evidence of achieving returns commensurate with the volume of investments.
The Nasdaq 100 index, which includes shares of the largest non-financial companies listed on Nasdaq, confirmed that it had entered a technical correction phase on Monday.
US markets initially declined following the election results, as Nasdaq 100 futures fell by up to 2.4 percent, while Standard & Poor's 500 futures fell by 1.4 percent.
But by 3:13 a.m. EST, Dow Jones Industrial Average futures rose 237 points, or 0.46 percent, Standard & Poor's 500 futures rose 11.25 points, or 0.15 percent, and Nasdaq 100 futures rose 72.75 points, or 0.26 percent.
Saudi stocks and Gulf markets opened higher on Wednesday, following the Republican Party's loss of control of the US Congress to the Democrats. Investors are awaiting whether this result will be reflected in the US administration’s directions and contribute to a decline in geopolitical risks, in light of the continuing war on Iran and regional tensions.
“TASI” rises 1.5%... and the Gulf markets rise
The main market index, TASI, rose by 1.52 percent, reaching 10,026 points, an increase of 150 points, exceeding the level of 10,000 points.
The Qatar Stock Exchange recorded the highest gains in the Gulf, with its index rising by 2.29 percent to 9,835 points, followed by the Dubai Financial Market by 2.25 percent to 5,942 points.
The Abu Dhabi Securities Market index also rose by 1.02 percent to 9,560 points.
The Muscat Market Index rose 0.70 percent to 7,273 points. The general market index of the Kuwait Stock Exchange rose 0.47 percent to 8,470 points.
The general index of the Bahrain Stock Exchange rose by 0.14 percent to 1,817 points.
Saudi blue chips rise
In terms of Saudi stocks, “Al Rajhi Bank” shares rose by 1.33 percent to 60.95 riyals, and “Saudi Aramco” shares rose by 0.31 percent to 26.24 riyals.
“Gas Holding” stock topped the list of rising stocks by 9.98 percent to 60.60 riyals, followed by “Amar” stock, rising by 9.96 percent to 42.16 riyals, then “CGS” stock by 9.84 percent to 6.14 riyals.
Flynas shares also rose by 3.26 percent to 40.58 riyals, despite the company’s net profits during the third quarter declining by 77.5 percent on an annual basis, to 27 million riyals ($7.2 million).
Bond yields in the euro zone largely stabilized on Wednesday, while their American counterparts fell, following the Democrats’ victory in control of the Senate and House of Representatives in the US midterm elections, as investors in Europe awaited the release of new data on inflation in the region.
The election results may have broad repercussions on sensitive market sectors and files, including the expansion of the establishment of artificial intelligence data centers, the financial expectations of the United States, defense spending, and regulations related to sectors such as health care, banking, and cryptocurrencies, according to Reuters.
Markets are also monitoring the possibility of a legislative stalemate between the administration of US President Donald Trump and the new Congress controlled by Democrats.
In commodity markets, Brent crude futures settled at $104.35 per barrel, after declining for two consecutive sessions, as investors awaited Washington’s next step in the US-Israeli war on Iran.
In debt markets, the ten-year German government bond yield settled at 3.3108 percent, while the ten-year US Treasury bond yield fell by 2.3 basis points to 4.927 percent.
Markets are awaiting the release of inflation data in the euro zone later Wednesday, amid expectations that it will rise in October compared to its level of 3.8 percent in September. Economists polled by Reuters expect the preliminary inflation reading to reach 4 percent in October.
The European Central Bank kept interest rates unchanged last week, but the possibility of raising them in December is increasing, as more monetary policy makers join the votes in support of this step.
German Central Bank President Joachim Nagel said on Tuesday evening that raising interest rates in December “seems absolutely necessary from today’s perspective.”
He added: “There appears to be little alternative to raising interest rates, unless inflation expectations improve significantly.”
Financial markets are currently pricing in about a 70 percent chance of raising interest rates in December.
In Germany, the yield on two-year government bonds, usually most affected by interest rate expectations, settled at 3.0167 percent.
