The Democratic Party swept through Congress and triggered a market revaluation: the “Trump deal” was under full pressure, and AI and crypto assets led the decline

The Zhitong Finance App learned that according to media forecasts, the Democratic Party won a historic victory in the US midterm elections, not only regaining control of the House of Representatives of the National Assembly, but also reversing Senate seats in several key states, and is expected to win a majority in the national gubernatorial election. This result quickly reshaped global market expectations: investors began to re-evaluate the “Trump deal,” which centered on Trump's policy agenda, and faced systemic repricing, from AI infrastructure and cryptocurrencies to fiscal expansion expectations.

As of press release, S&P 500 futures fell about 0.9%, Nasdaq 100 futures extended to 2%, Dow futures fell by about 156 points; panic index VIX futures rose above 20. The US dollar index weakened across the board. The Bloomberg US dollar spot index once fell 0.4%, the biggest one-day decline in a month; US bonds bucked the trend. The 10-year yield fell by about 7 basis points to 4.89%, and the 5-year yield fell 9 basis points to 4.68%.

AI deals bear the brunt: regulation and data center uncertainty

In this round of market adjustments, the AI sector is under the most obvious pressure. The decline in Nasdaq 100 futures indicates that US technology stocks will usher in another weak trading day. Nvidia (NVDA.US) declined during overnight trading, continuing the previous impact on Asian chip stocks. Korea's Kospi Index fell 4% during the intraday period. Samsung Electronics and SK Hynix both narrowed after falling by more than 5%; Japan's Nikkei 225 Index fell nearly 5%.

The core of market concerns is that after the Democratic Party takes control of the National Assembly, the technology industry and data center construction facilities will be scrutinized more strictly. Candidates from both parties have listed data centers as an election topic, further fueling the market's existing doubts about the scale and return of AI spending. Anna Wu, investment strategist and founder of Floodlines Research, said, “Democrat-controlled Congress and Democrat-controlled states mean more scrutiny of data centers, electricity usage, and local approvals. The current market sentiment is weak and self-reinforcing. Investors sell AI first and then ask questions.”

Chris Weston, head of research at Pepperstone, said: “The blue wave may have been partially anticipated, but its scale has forced the market to reassess risk. Currently, the stock market bears the greatest burden of political uncertainty, and technology and AI are at the center of adjustment.”

Clean energy bucked the trend and strengthened: policy reversals expectations heats up

In stark contrast to the AI sector, clean energy stocks such as solar energy rose sharply. Investors are betting that the Democratic sweep could slow or reverse some of Trump's measures on clean energy projects, thereby benefiting Asian solar, battery, and grid suppliers with US exposure. Korea's Hanwha Solutions once rose 17%, while HD Hyundai Energy Solutions and OCI Holdings both rose at least 8%. In terms of US stocks, Enphase Energy and SolarEdge Technologies rose 12% at one point, while First Solar and Sunrun rose 11% and 8.7%, respectively.

Dollar Under Pressure, US Debt Strengthens: Fiscal Expansion Expectations Cool Down

The US dollar weakened against all G10 currencies, and the market feared that the Democratic Party's sweep could weaken the “American exceptionalism” narrative, especially if stricter scrutiny of AI investments dragged down growth. Safe-haven assets such as the Swiss franc and yen strengthened, and the Swiss franc ranked first among G10 currencies in terms of growth against the US dollar.

The full curve of US debt is strengthening, and yields are declining. Investors are betting that the Democrat-controlled Congress may restrain Trump's tax and spending agenda, thereby reducing the prospects for fiscal stimulus and additional borrowing. Brij Khurana, portfolio manager at Wellington Management, said: “Dividing the government means that high fiscal spending in recent years will be restrained. Judging from the laws of history, a split government pattern is usually quite beneficial to US debt.” Andrew Ticehurst, senior interest rate strategist at Nomura Securities, also pointed out that the blue wave scenario is generally regarded as being biased against the US dollar and too much debt against the US, and the early Asian trading trend is consistent with this judgment.

Cryptocurrency falls back: legislative prospects are overshadowed

Cryptocurrency declined along with risky assets, and the midterm election results left the industry-supported legislative path facing uncertainty. Trump has previously been a high-profile supporter of the industry, promising to make the US a “global crypto capital,” establish strategic bitcoin reserves, and ease regulatory pressure. However, with the election results, Bitcoin once fell 2.8% to below $76,000, while Ethereum and Solana also declined. Crypto assets have previously been pressured by outflows of Bitcoin spot ETF funds and the aftermath of last week's Binance record hacking incident.

Crude oil and copper: the double suppression of geography and risk appetite

Oil prices continued to fall, and investors weighed the restart of peace efforts between the US and Iran. Brent crude oil is trading at around $103 per barrel, bringing some relief to Asian economies dependent on energy imports. New diplomatic developments between Washington and Tehran have driven the latest round of decline, but the threat of the US restarting the crackdown after the midterm elections still looms over the market. Analysts pointed out that the Democrat-controlled Congress may increase pressure on the Trump administration on war issues, but it will not dominate US military or foreign policy. As a result, oil prices are still an important uncertain factor in the Asian market, especially for import-dependent economies such as India.

Copper prices continued their recent decline, and the election results heightened risk aversion and raised questions about the two pillars of this year's rise — the AI investment boom and Trump's tariff plan. Copper prices fell 1.5% on Wednesday, and investors reassessed the boom in data center and grid spending while weighing the prospects of Trump's proposed tariffs on refined copper.

On the gold side, traders are evaluating whether the strong performance of the Democratic Party will restrain Trump's fiscal agenda and dampen expectations of further spending. Concerns about the widening deficit and the US government's finances have been the main driving force behind the rise in gold prices. At one point, the price of gold rose 0.9% above $3,960 per ounce, erasing the mild correction from the previous trading day.

Market outlook: short-term fluctuations coexist with long-term opportunities

Some strategists suggest that market fluctuations caused by elections tend to last for a limited time in history. Angelo Kourkafas, senior strategist at Edward Jones, said that the election results may “clear up” uncertainty, and that AI theme trends and geopolitical dynamics are the core variables driving the market towards the end of the year. At the same time, he pointed out that if there are large market fluctuations driven by elections, it may provide long-term investors with an opportunity to take a dips layout.

However, with the probability of a Democratic sweep soaring to close to 100%, the market's revaluation of the “Trump deal” may have just begun. From regulatory scrutiny of AI infrastructure and clean energy policy reversals, to cooling expectations of fiscal expansion and loosening of the dollar narrative, investors are repricing a policy mix under a divided government. For the Asian market, the transmission of sentiment in technology stocks, fluctuations in energy prices, and the trend of the US dollar will be key variables to watch in the coming weeks.