Asian Stocks and Dollar Fall as Democrats Win Senate and Target House in US Midterms

Global markets fell sharply on Wednesday as US midterm results pointed to a major shift in power in Washington. The Associated Press called the Senate for Democrats, who were also on course to take the House of Representatives — a significant setback for President Donald Trump, whose Republican Party had controlled both chambers since the start of his second term.

The prospect of a Democratic-controlled Congress unsettled investors, who fear tighter AI regulation and broader legislative gridlock. Analyst Chris Weston of Pepperstone warned, according to AFP, that Democratic control would raise the risk of "fiscal brinkmanship, debt-ceiling disputes, and congressional investigations," though he noted the president would retain considerable executive authority. Trump himself said he would become "Mr Veto" if Democrats won Congress, while leaving open the possibility of eventual deals.

Asian stocks bore the brunt of the sell-off. Tokyo's Nikkei 225 fell 2.85% as a strengthening yen weighed on exporters, and SoftBank Group — a major OpenAI investor — slumped 8%. South Korea's Kospi dropped 1.17%, Taiwan's Taiex fell 2.3%, and Australia's S&P/ASX 200 shed 0.8% after the central bank raised interest rates on Tuesday. Hong Kong's Hang Seng edged up 0.38%.

The dollar weakened broadly: the euro rose to $1.1249, the pound gained 0.4% to $1.3460, and the dollar fell to ¥157.63 against the yen. European equity futures were down 0.3–0.5% at 06:00 CET. The 10-year US Treasury yield reversed an earlier decline and climbed back to around 4.945% by 06:00 CET. Gold rose nearly 0.5% to $3,958.50 an ounce, while Brent crude fell below $104 a barrel.