Early indications from vote counting in the US midterm elections suggest gains for the opposition Democratic Party, raising the possibility of a shift in control of Congress. The prospect of Democrats securing majorities in both the Senate and the House of Representatives has unsettled financial markets, with US stock futures declining, the dollar weakening, gold gaining and Asian equities trading lower.
Investors fear that a Democratic-controlled Congress could lead to prolonged confrontations with President Donald Trump over government spending and fiscal deficits. Political compromises could eventually result in higher deficits, potentially weakening the dollar further.
Markets are also concerned that Democrats could push for restrictions on data centre construction, tighter regulation of artificial intelligence development and investigations into major technology companies.
These uncertainties have triggered a decline in US futures and Asian equities. Gold prices have strengthened, while US Treasury bond prices have risen, pushing yields lower.
In derivatives trading at GIFT City, GIFT Nifty closed at 23,725.00 on Tuesday night. It climbed to 23,761 in early trading on Wednesday before slipping to 23,686, indicating that Indian equities could open lower.
Wall Street ended Tuesday's session with mixed performances as investors awaited the outcome of the midterm elections. A recovery in semiconductor stocks lifted the Nasdaq Composite, while weakness in Apple shares dragged the Dow Jones Industrial Average lower.
Technology companies reported encouraging quarterly results after the market closed.
Chipmaker Advanced Micro Devices (AMD) reported a 45% increase in revenue, with data centre revenue doubling. CEO Lisa Su said the company's server revenue could double next year. AMD shares jumped 8% in after-hours trading.
Better-than-expected revenue and profit figures lifted Super Micro Computer shares by 9%, while cloud networking company Arista Networks gained 12%.
Recent US economic data also offered positive signals. Job openings reached 7.52 million in September, their highest level in four months, while layoffs declined to an 18-month low.
The US manufacturing Purchasing Managers' Index (PMI) rose to 55.5 in October, its second-highest reading in four years.
However, the positive economic indicators were overshadowed by uncertainty surrounding the elections and the Iran conflict.
On Tuesday, the Dow Jones Industrial Average declined 197.26 points, or 0.38%, to close at 51,786.72.
The S&P 500 gained 27.52 points, or 0.36%, to finish at 7,568.92, while the Nasdaq Composite rose 207.65 points, or 0.83%, to 25,372.01.
US stock futures moved lower on Wednesday amid concerns over the potential political consequences of the midterm elections.
Dow Jones futures fell 150 points, or 0.29%. S&P 500 futures declined 60 points, or 0.79%, while Nasdaq futures plunged 498 points, or 1.76%.
The sharper decline in Nasdaq futures reflects concerns about potential regulatory pressure on technology and artificial intelligence companies.
Indian American Depositary Receipts (ADRs) traded mixed in New York on Tuesday.
HDFC Bank's ADR gained 1.54% during regular trading and remained unchanged in extended trading at $23.05.
ICICI Bank rose 0.23% during the regular session but declined 0.43% in extended trading to $30.00.
Infosys fell 2.65% during regular trading and slipped another 0.25% in extended trading to $11.90.
Wipro remained unchanged during regular trading before gaining 0.08% in extended trading to $2.1518.
European equity indices closed lower on Tuesday as investors remained cautious about uncertainties surrounding the US elections and the conflicts involving Ukraine and Iran.
Geopolitical developments and their potential impact on economic growth, energy prices and international trade continued to weigh on investor sentiment.
Asian stock markets declined on Wednesday as investors reacted to early indications from the US midterm elections.
South Korea's Kospi initially surged 3% before reversing its gains and slipping into negative territory. Semiconductor companies SK Hynix and Samsung Electronics also surrendered their early gains.
Japan's Nikkei fell 2.8%, while Australia's benchmark index declined 0.60%.
Taiwan's stock index slipped 0.30%, Shanghai fell 0.25%, and Hong Kong's Hang Seng traded 0.50% lower.
Indian equities extended their winning streak to a fourth consecutive session on Tuesday, supported by increased foreign institutional investment and declining crude oil prices.
Foreign investors pumped nearly ₹10,000 crore into Indian equities over two sessions, providing momentum to the market rally.
Expectations that the government could substantially reduce or abolish long-term capital gains (LTCG) tax on equity investments also supported sentiment. However, no official decision on such a tax change has been announced.
The possibility of higher trading activity following a tax reduction boosted capital market stocks. Shares of stock exchanges and brokerage companies gained more than 4%, while Angel One surged 8%.
FMCG stocks led the sectoral rally, rising 3.65%, while the capital markets index jumped 4.53%. Realty stocks advanced 2.33%. Private banks, financial services companies and automobile manufacturers also recorded substantial gains. Public sector banks and metal stocks were the only major sectors to close lower.
The broader market displayed positive breadth. On the BSE, 2,459 stocks advanced while 1,928 declined. On the NSE, 2,124 stocks gained against 1,467 that ended lower.
Foreign institutional investors (FIIs) made net purchases worth ₹6,836.81 crore in the cash market on Tuesday. Domestic institutional investors (DIIs), meanwhile, recorded net sales of ₹3,678.85 crore.
The Sensex surged 1,225.07 points, or 1.62%, to close at 76,917.85. The Nifty 50 advanced 370.05 points, or 1.58%, to finish at 23,810.85. Bank Nifty gained 537.85 points, or 0.98%, to close at 55,540.05.
The Nifty Midcap 100 rose 612.85 points, or 1.06%, to 58,596.25, while the Nifty Smallcap 100 added 57.55 points, or 0.31%, to 18,652.85.
Gold prices moved higher in early trading on Wednesday as investors reacted to indications of Democratic gains in the US elections.
The precious metal had declined on Tuesday, closing $16.30 lower, or 0.41%, at $3,931.40 per troy ounce. Gold recovered to around $3,950 an ounce on Wednesday morning. In Kerala, the price of 22-carat gold increased by ₹200 per sovereign of eight grams on Tuesday to ₹1,02,400.
Silver declined 1.69% on Tuesday to close at $49.91 an ounce. It traded at $49.86 on Wednesday morning.
Among other precious metals, platinum was quoted at $1,414 an ounce, palladium at $923 and rhodium at $8,550.
International rubber prices declined further, while domestic prices in Kerala remained at a record ₹300 per kg. In Bangkok, RSS-1 rubber declined to $281.40 per quintal, while RSS-3 fell to $278.00 per quintal. In Kerala, RSS-4 rubber remained at ₹30,000 per quintal.
Major industrial metals traded lower on Tuesday. Copper declined 0.49% to $14,377.65 per tonne, while aluminium fell 0.42% to $3,060.00 per tonne. Nickel and tin recorded gains, while zinc and lead moved lower.
Cocoa futures closed at $5,420 per tonne. Although cocoa inventories on the ICE exchange reached their highest level in two-and-a-half years, African production is expected to decline by 10% during the 2026-27 season.
According to estimates by StoneX, the global cocoa market could shift from a surplus of 494,000 tonnes in 2025-26 to a deficit of 64,000 tonnes in 2026-27.
Arabica coffee prices declined 2.76% to $2.84 per pound, pressured by increased supplies from Brazil and weakness in the Brazilian currency.
Palm oil prices fell 2.11% to 4,551 Malaysian ringgit per tonne.
The US dollar weakened on Wednesday as early election indications suggested gains for the Democrats.
The dollar index, which had climbed to 101.87 at Tuesday's close, fell to 101.35 in early trading. The euro strengthened to $1.1235, while the British pound rose to $1.3453.
The Japanese yen traded at 158.19 against the dollar. The Chinese yuan was quoted at 6.67 per dollar.
The yield on the benchmark 10-year US Treasury bond stood at 4.898% on Wednesday morning.
The Indian rupee extended its gains on Tuesday, with the US dollar declining 16 paise to close at ₹94.74. In offshore forward trading on Wednesday morning, the dollar was quoted at ₹94.72.
The Chinese yuan declined to ₹14.21, while the euro strengthened to ₹106.46.
Crude oil prices continued their downward movement on Wednesday following the US midterm elections. Brent crude, which closed at $103.60 a barrel on Tuesday, declined to $103.26 in early trading. West Texas Intermediate (WTI) crude traded at $95.58 a barrel.
Lower crude prices have been supportive of Indian equities, given the country's heavy dependence on imported oil.
Cryptocurrency markets continued to experience sharp fluctuations. Bitcoin slipped below $77,000, while Ether traded below $2,270. Solana declined below $92 as volatility persisted across major digital assets.
(Tuesday, November 3)
Sensex: 76,917.85 (+1.62%)
Nifty 50: 23,810.85 (+1.58%)
Bank Nifty: 55,540.05 (+0.98%)
Nifty Midcap 100: 58,596.25 (+1.06%)
Nifty Smallcap 100: 18,652.85 (+0.31%)
Dow Jones: 51,786.72 (-0.38%)
S&P 500: 7,568.92 (+0.36%)
Nasdaq Composite: 25,372.01 (+0.83%)
US dollar: ₹94.74 (-₹0.16)
Gold (per ounce): $3,931.40 (-$16.30)
Gold (Kerala, per sovereign): ₹1,02,400 (+₹200)
Brent crude (per barrel): $103.60 (-$0.82)