The markets' eyes and ears on the US elections: How did the Democrats' victory affect the stock markets?

Global markets are focused on the unconfirmed first results of the midterm Congressional elections in the USA. Expectations that Democrats could win both the House of Representatives and the Senate reduced investors' risk appetite, causing fluctuations in asset prices.

TRUMP'S POLICIES MAY BE DISTURBED

The general opinion in the markets is that if Democrats gain the majority in Congress, the tax cuts and expansionary fiscal policies implemented by President Donald Trump's administration will become difficult. If the Republicans lose both wings, it could significantly narrow Trump's political space.

This expectation has brought about concerns that regulatory inspections may increase, especially for technology and artificial intelligence companies with high growth potential. This situation is seen as a downside risk for stock markets and the dollar.

SHARP FALLS IN FUTURES AND ASIA

As the signals regarding the Democrats' midterm election success grew stronger, sharp declines were observed in index futures contracts in the USA. Risk appetite has also decreased significantly in Asian markets. Asian stock markets are generally closed on the new trading day. Nikkei 225 in Japan fell 2.9 percent, and Kospi in South Korea fell 1.2 percent.

DOLLAR FALLED, GOLD AND EURO RISED

The prediction that the election results would limit Trump's expansionary fiscal policies and that the US budget deficit would not grow as much as expected put pressure on the dollar. While the dollar index decreased by 0.5 percent to 101.3, the Euro/dollar parity increased by 0.6 percent to 1.1250.

With the increase in demand for US bonds, the 10-year bond rate decreased by 7 basis points to 4.90 percent. As political uncertainties increased, investors sought a safe haven and the ounce price of gold gained 0.9 percent, reaching 3 thousand 954 dollars.

THE EXPECTATION OF FED'S RATE INCREASE IN DECEMBER IS STRONG

Despite the election uncertainties, the strong course of the US economy and ongoing inflationary pressures keep the possibility of an interest rate increase by the US Federal Reserve (Fed) high. In money markets, the probability that the Fed will increase the policy rate by 25 basis points at its December meeting has increased to 80 percent. This expectation is supported by the fact that the number of JOLTS job vacancies exceeded expectations and reached 7 million 523 thousand in September.

EYES IN EUROPE ARE ON BOTH ELECTIONS AND INFLATION

European stock markets (except Italy) also finished the day with a decline. In addition to the midterm elections in the USA and the developments in the Middle East, investors are focused on the Eurozone inflation data to be announced today. During the accelerating balance sheet season, company financials are also closely monitored.

RISE IN BORSA ISTANBUL

Despite the negative course in global markets, Borsa Istanbul's BIST 100 index closed yesterday at 11,023.55 points with a 0.56 percent increase. Analysts state that, technically, 11,200 and 11,300 points are resistance levels in the BIST 100 index, while 10,900 and 10,700 points are support levels. Dollar/TL is traded at 50.0190 in the interbank market today, after finishing yesterday at 49.9820.

Data to Watch in the Markets Today: