US stock markets recorded significant gains on Wednesday after Democrats secured a sweeping victory in the midterm elections, although President Donald Trump claimed credit for the market’s strong performance.
The Dow Jones Industrial Average climbed 1,100 points, representing a 2.3 per cent increase, following the Republican Party’s heavy electoral losses.
European stock markets also advanced by approximately 2 per cent during afternoon trading.
The election attracted tens of millions of American voters and was widely viewed as a referendum on the White House amid growing dissatisfaction over rising petrol prices, the effects of tariffs and the war involving Iran.
Democrats secured control of both chambers of Congress, giving the party the ability to block legislation, launch investigations into the Trump administration and obstruct judicial and senior government appointments.
Trump Takes Credit for Stock Market Gains
Despite his party’s significant defeat, Trump celebrated the stock market’s performance in a post on Truth Social on Wednesday morning.
He wrote: “Stock Market just hit another Record High — 91 Days in just a short period of time — Less than two years.
Your 401(k)s are through the roof. Record Setting All!”
The President had previously indicated that he would become “Mr Veto” if Democrats gained control of Congress.
Technology Stocks Lead Gains as Some Major Companies Decline
Several major technology companies recorded gains during trading, with Amazon shares rising 7.1 per cent.
Meta Platforms advanced 1.6 per cent, while Alphabet gained 3.4 per cent.
However, Elon Musk’s SpaceX and Tesla moved in the opposite direction, falling 1.9 per cent and 3.9 per cent respectively.
Musk had spent nearly half a billion dollars supporting Republican candidates, including campaigns aimed at maintaining Republican control in Texas, the home state of both companies.
Analysts Predict Political Gridlock Could Support Markets
Financial analysts expect Democratic control of the House and Senate to create political gridlock, potentially limiting the administration’s ability to introduce new policies.
Kathleen Brooks, research director at trading platform XTB, said: “Gridlock might be bad for politics, but it is good for markets, and traditionally US indices experience a strong rally after midterm elections.”
She added that the recent downturn in stocks, particularly those linked to artificial intelligence, could create conditions for stronger market performance towards the end of the year.
Patrick O’Hare of Briefing.com also pointed to Trump’s response to the election results as a factor supporting investor confidence.
Trump had congratulated Democrats and indicated that he was willing to work with them, prompting expectations that the election outcome would not be challenged.
O’Hare wrote that investors appeared reassured by the understanding that the overall election result would not be contested.
Defence Stocks Fall as Spending Plans Face Congressional Opposition
Shares in major US defence contractors declined following the Democratic victory.
Northrop Grumman, RTX and Lockheed Martin all recorded sharp falls as investors assessed the potential impact of the new congressional balance on Trump’s proposed $1.5 trillion defence budget.
The President’s spending request could face greater resistance from lawmakers under Democratic control.
Clean Energy Shares Climb on Expectations of Federal Support
Solar and clean energy-related companies recorded substantial gains as investors considered the possibility that Democratic control of Congress could help preserve federal support for clean energy development.
The Invesco Solar ETF rose 8.3 per cent during trading.
Meanwhile, concerns over potential regulation of artificial intelligence and data centre development weighed on technology-related stocks.
Scott Chornert, head of US equity strategy at Citi Research, said the election result could create challenges for the AI industry.
He explained that changes to the pace of data centre construction could affect the underlying growth prospects of companies supplying the sector.
The industry has already faced pressure as investors question the substantial amounts being spent by major technology companies on AI development and whether those investments will generate sufficient returns.
Data Centre Companies Record Significant Losses
Companies operating data centres across the United States also experienced declines.
IREN, Hut 8, Applied Digital and Core Scientific recorded losses ranging from 1.2 per cent to 13 per cent.
Although concerns about possible AI regulation initially weighed on Asian markets, US stocks continued to advance.
The technology-heavy Nasdaq rose 1.6 per cent after experiencing losses since the previous week.
Global Markets Respond to Election Results
Stock markets across Europe recorded gains despite official figures released on Wednesday showing that eurozone inflation had reached 4.0 per cent in October, its highest level in three years.
Asian markets also performed strongly, although Tokyo closed lower as technology shares struggled.
The dollar weakened against other major currencies, while oil prices declined. Brent crude, the international benchmark, lost 3.0 per cent of its value.
Bond yields remained relatively stable, avoiding the volatility experienced in recent trading sessions, while gold benefited from increased demand for safe-haven investments.
BMW Shares Rise as Google Announces Malaysia Investment
Investors also continued to assess third-quarter corporate earnings and business announcements alongside the political developments in the United States.
German automaker BMW announced on Wednesday that it would increase its planned job cuts after reporting a decline in third-quarter profits.
Despite the earnings decline and workforce reduction plans, the company’s shares rose 6.0 per cent.
Meanwhile, Google announced plans to invest $15 billion in Malaysia over the next two years to develop data centres and other infrastructure.
Shares in its parent company, Alphabet, gained 3.4 per cent during trading.
