Initial vote counts from the 2026 U.S. midterm elections indicate strong Democratic momentum, with market bets on a "blue wave" sweeping both chambers of Congress rising sharply. Global markets reacted swiftly, as U.S. stock futures fell sharply, the dollar weakened, Treasury prices rose, and Asian equities came under broad pressure.
As early election results rolled in, Democrats captured a Senate seat in North Carolina, and the probability of a Democratic sweep of both chambers on the prediction platform Polymarket soared to 99%. S&P 500 futures briefly turned negative, dropping 1% and erasing a prior 0.5% gain; Nasdaq 100 futures extended losses to 2%. The dollar index fell more than 0.5% intraday, and the 10-year U.S. Treasury yield declined about 7 basis points to 4.89%.
According to CCTV International News, U.S. media reported that on November 3 local time, former North Carolina Democratic Governor Roy Cooper defeated Republican candidate Michael Whatley, who was backed by President Trump, in the federal Senate election, securing a key Senate seat for Democrats. The victory broke the Republican Party's 18-year winning streak in the state's federal Senate elections.
Democratic Sweep Odds Soar, North Carolina Emerges as Key Breakthrough
Among the key election results already released, Democratic momentum has clearly exceeded market expectations. In addition to Roy Cooper winning North Carolina, Georgia Democratic incumbent Senator Jon Ossoff is also expected to win re-election. Ossoff rose as a rising star within the party by consistently criticizing Trump for using the presidency for personal gain.
In the House of Representatives, New York Democratic candidate Lasher and Pennsylvania candidate Paige Cognetti are both expected to win. As of the time of reporting, the prediction platform Kalshi showed Democrats had about a 99% probability of winning the House and about a 98% probability of winning the Senate, with the prospect of a sweep of both chambers rapidly taking shape.
After winning North Carolina, Democrats still need to defend all their own seats and pick up three additional seats from Republicans to control the Senate. The election situation continues to evolve.
US Stock Futures Plunge, Dollar Under Broad Pressure
Investors' first reaction to the Democratic wave was to reduce risk assets. S&P 500 futures fell about 0.9%, Nasdaq 100 futures dropped 2%, and Dow Jones Industrial Average futures declined about 156 points, or 0.3%. Meanwhile, the恐慌 index VIX futures rose above 20, touching a key psychological threshold for market anxiety.
The dollar index weakened across the board, with the Bloomberg dollar spot index falling 0.4%. The euro rose 0.6% against the dollar to 1.1258, the yen strengthened 0.5% to 157.86, the Swiss franc led G10 currency gains at 0.7%, and the Swedish krona also rose 0.6%.
U.S. Treasuries became the main beneficiary of this round of market moves. The 10-year U.S. Treasury yield fell to 4.89%, while the Australian 10-year government bond yield also declined 4 basis points to 5.04%.
Divided Government Expectations Weigh on Tech Stocks, Benefit Treasuries
There is a clear logical thread behind the market moves. Investors generally believe that if Democrats control Congress, they will constrain Trump's tax cuts and pro-business policies, while also bringing stricter regulatory pressure on the technology and artificial intelligence sectors, especially with uncertainty surrounding policies related to data center construction. AI-related stocks had already pulled back in recent weeks on concerns about slowing data center spending growth.
By contrast, a divided government often means tighter fiscal spending and reduced federal borrowing pressure, which is positive for government bonds. Brij Khurana, a portfolio manager at Wellington Management, a Fidelity Investments unit, said: "It is still very early to draw conclusions, but Democrats appear to be performing better than expected. A divided government means the high fiscal spending of recent years will be constrained. Historically, a divided government has usually been quite favorable for U.S. Treasuries."
Andrew Ticehurst, a senior rates strategist at Nomura Securities in Sydney, also said: "Early headlines and prediction markets both show the probability of a blue wave rising. This scenario is generally seen as bearish for the dollar and bullish for U.S. Treasuries, and early Asian trading is consistent with that judgment."
Asian Stocks Fall, Japan and South Korea Lead Declines
Asian equities came under broad pressure against this backdrop. The MSCI Asia-Pacific index fell about 1% to 253.24 points. Nikkei 225 futures dropped more than 3%, and the Topix fell 1.7%, ranking among the worst performers among major Asia-Pacific markets. South Korea's Kospi reversed from an intraday gain of as much as 3.2% to a loss of 1.6%, making it one of the most volatile markets in this election-driven shock. Australia's S&P/ASX 200 index fell 0.3%.
Some strategists noted that market volatility triggered by elections has historically often been short-lived. Angelo Kourkafas, a senior strategist at Edward Jones, said the election results may serve as a "clearing" event that removes uncertainty, and that the trajectory of the AI theme and geopolitical developments are the core variables driving markets toward year-end. He also noted that if election-driven market swings are significant, they may offer long-term investors opportunities to buy on dips.
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