Democrats take Congress, lifting Wall Street and Warsaw as oil drops sharply

Democrats take Congress and Wall Street rallies

Democrats secured majorities in both chambers of the US Congress in the midterm elections, a result that will force the White House to win over at least some Democratic lawmakers for its legislative agenda. Markets first reacted with nerves, particularly in technology shares tied to the artificial intelligence boom, but buying returned during the day. On 4 November the Dow Jones Industrial Average closed up 3.03% at 53,356.48 points, the S&P 500 gained 1.58% to 7,688.60 and the Nasdaq Composite rose 1.44% to 25,736.51. Cloud providers led the advance, with Microsoft up 6.68%, Amazon up 6.12% and Alphabet up 3.18%. Large banks also rallied, with JPMorgan Chase rising 4.18% and Goldman Sachs 3.56%.

Dow Jones Industrial Average3.03%

S&P 5001.58%

Nasdaq Composite1.44%

Dow Jones Industrial Average

3.03 %

S&P 500

1.58 %

Nasdaq Composite

1.44 %

Data from the article text

Oil and bond yields retreat

Brent crude fell to around 95 USD a barrel, down 8.87% on the day according to a later report, after earlier slipping below 100 USD for the first time in a month. The drop was the largest three-day decline in more than six years. On the Dutch benchmark, gas contracts fell 8% to 84 euros per MWh. Yields on US Treasuries eased, with the 10-year note at 4.888% and the 30-year at 5.277%, as investors weighed possible cuts to federal spending and the budget deficit. Investors hope the new balance in Congress will push the administration toward ending the conflict with Iran and reopening the Strait of Hormuz, though it is too early to judge whether that will happen.

What the result means for policy

Most tariffs imposed by the Trump administration on trading partners were introduced through executive orders and do not need Congressional approval, so the new majority may limit legislation without automatically reversing trade policy. Michał Jóźwiak of XTB said the scale of the win, the largest since the 1974 to 1976 Watergate period, was the real surprise, rather than the victory itself. He pointed to the budget, which Congress and the president must agree on, and to the debt ceiling, which would need new legislation, warning that a shutdown lasting days or even weeks is possible. He said:

“The next two months, before the balance of power in Congress shifts, could still bring further surprises from Donald Trump.”

Europe and Warsaw follow

The pan-European Stoxx Europe 600 gained 1.8%, its largest gain since 12 June, and banks led with Deutsche Bank up 6.9%, BNP Paribas up 4.7% and NatWest Group up 5.3%. Shares of companies seen as AI beneficiaries fell, including Siemens Energy down 7.95%, Infineon Technologies down 4.1%, STMicroelectronics down 5.1% and Schneider Electric down 3.4%, amid concern that a Democratic Congress could slow investment in data centres. In Warsaw the WIG20 closed at 4190.08 points, up 1.24%, while the broad WIG rose 1.47% to 158,141.27 points and mWIG40 gained 2.30%. Orlen was the weakest WIG20 stock, down 2.75% as oil fell, while KGHM rose 4.19% and Modivo 4.33%. Banks on the WIG-Banki index gained 1.81%, helped by a firmer zloty.

WIG201.24%

WIG1.47%

mWIG402.3%

sWIG800.41%

WIG20

1.24 %

WIG

1.47 %

mWIG40

2.3 %

sWIG80

0.41 %

Data from the article text

Musk's companies and campaign spending

Tesla fell 3.34% to 385.19 USD and SpaceX shares dropped 3.88% to 135.83 USD, as the result raised fears of tighter federal scrutiny of Elon Musk's business ties to the government. Musk spent close to 500 million dollars supporting Republican campaigns ahead of the Congressional elections. Cloud and bank stocks, by contrast, gained strongly on the same day.

Analyst views

Mikołaj Sobierajski, an XTB analyst, wrote that the initial reaction was nervous, especially in technology, before sentiment improved in later hours. He added:

“For emerging markets, including Poland, the election result may bring some relief and reduce the risk tied to unpredictable US trade policy.”

Bitcoin also climbed above 80,000 USD in the afternoon session. Jóźwiak expects the Federal Reserve to keep raising interest rates.