Stocks surge after Trump's election rout

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World

Author: AFP,
Publish Date: Thu, 5 Nov 2026, 7:18am

Wall Street stocks bounced up early Wednesday as markets digested sweeping electoral wins by congressional Democrats expected to significantly saddle Republican President Donald Trump. Photo / Timothy A. Clary, AFP

Share prices surged as traders digested President Donald Trump’s heavy defeat in US midterm elections and his Republican Party’s loss of control of Congress.

Democrats seized control of both houses in a victory that gives them the power to block legislation, open investigations into Trump’s Administration and thwart his judicial and senior government appointments.

After opening higher, European indexes jumped on Wednesday afternoon (local time) by around 2% and US stocks rivalled those gains on opening, with the Dow up 2.3%.

Analysts are expecting the new reality in Washington to bring political stagnation, with Trump having earlier promised he would become “Mr Veto”.

“Gridlock might be bad for politics, but it is good for markets, and traditionally US indices experience a strong rally after midterm elections,” said Kathleen Brooks, research director at trading platform XTB.

“After the recent rout in stocks, especially AI-linked stocks, the stage could be set for a strong performance into year-end,” she said.

As stocks rose, the dollar sank against other major currencies and the price of oil tanked – Brent crude dropped 3%.

Trump has been a staunch backer of US technology firms but the Democratic victory has sparked fear that AI and data centre development could be regulated.

That fear initially led Asian markets to struggle, but US indexes showed no signs of sluggishness, with the tech-heavy Nasdaq posting a 1.6% rise after tumbling since last week.

The gains in Europe came despite official data Wednesday showing that eurozone inflation reached a three-year high of 4% in October.

Markets across Asia also performed strongly, though Tokyo ended lower as its tech sector struggled.

Tens of millions of Americans voted in the crucial polls pitched as a referendum on the White House, as anger grows at surging petrol prices, the impact of tariffs and the Iran war.

Bond yields avoided recent volatility, while gold benefited from its status as a safe-haven investment.

Patrick O’Hare from Briefing.com highlighted that Trump had signalled an end to the election by congratulating the Democrats and saying he looked forward to working with them.

“Reading between those lines, the market took comfort in the understanding that the overall election result won’t be contested,” he wrote in a note.

Aside from the US vote, investors continued to follow third-quarter earnings.

BMW said Wednesday that it would step up planned job cuts as it reported a drop in third-quarter profit, news that jumped its share price by 6%.

Google meanwhile said it planned to invest US$15 billion ($27b) in Malaysia over the next two years to build data centres and other infrastructure, and its shares rose 3.4%.