Democrats win US midterms as Asian stocks fall and the dollar slips

Democrats take Congress

Projections by CNN and BBC, cited by naTemat, give the Democrats control of the House of Representatives and the Senate in the midterm elections held on Tuesday, 3 November. Counting was still under way on Wednesday morning, according to Parkiet, but the Democrats were on course to take both chambers. Polymarket, cited by AFP, had given the Democrats a 99% chance of winning the Senate overnight. In Texas, Democrat Gina Hinojosa was ahead of the Republican incumbent Greg Abbott in the governor's race, and the party also won Senate seats in Kansas and Texas. Hakeem Jeffries is set to become the first Black speaker of the House.

Trump's reaction

In an interview with Fox News, Donald Trump first said he was somewhat surprised and that the Democrats had done a good job, according to naTemat. In overnight posts his tone changed. He shared a cap reading 'WETO' in place of the 'Make America Great Again' slogan, said he would not sign any bill from the opposition, and blamed Texas governor Greg Abbott and Fox News for the defeat. Parkiet noted that overriding a presidential veto requires two-thirds majorities in both chambers, which the Democrats will not have.

Asian stocks and the dollar

The Nikkei 225 fell 4.45% to 60,274.46 points in the afternoon session, while the broader Topix dropped 3.25% to 3,802.72. South Korea's Kospi, which had risen early, ended down more than 3%, and Taiwan's Taiex lost almost 1%. Shares of memory maker Kioxia Holdings traded more than 11% lower at points in Tokyo. The dollar fell 0.65% to 157.65 yen and 0.41% against the euro, according to AFP. Gold rose more than 2% to $4,012 an ounce, and Brent crude was about $103 a barrel, slightly lower. In Poland, the dollar traded at about 3.92 zloty on Wednesday morning, against an NBP average of 3.9526 zloty on Tuesday, 3 November.

Nikkei 225-4.45%

Topix-3.25%

Kospi-3.9%

Nikkei 225

-4.45 %

Topix

-3.25 %

Kospi

-3.9 %

Data from the article text

Why AI stocks came under pressure

Investors fear tighter regulation of artificial intelligence, reduced subsidies for data-centre construction and a legislative standoff in Washington. Parkiet reported that CoreWeave fell 7%, Oracle 7% and SpaceX 6%. Wells Fargo data put 27% of planned data-centre gigawatts in Texas, and Hinojosa had openly backed a moratorium on AI data centres. Scott Ladner of Horizon Investments said that if Abbott lost, the state's data-centre appeal would weaken. Philip Jagd of Petersen & Partners warned that local opposition to data centres could move to the federal level if Democrats win both chambers.

Bonds and the outlook for the dollar

The yield on 10-year US Treasuries fell 6 basis points to 4.90%, and 5-year yields dropped 9 basis points to 4.68%, according to pb.pl. Rinto Maruyama of SMBC Nikko Securities argued that tougher AI rules would be hard to enact given technological competition with China, so the dollar's weakness may be temporary. Pb.pl also flagged that failed US talks with Iran could push oil prices higher, raise inflation expectations and strengthen the case for Federal Reserve rate increases.