Market Talks covering the impact of U.S. Politics and White House policies on companies and markets. Published exclusively on Dow Jones Newswires throughout the day.
0459 ET - Long-term allocators to bitcoin, including pension funds, should not alter their approach as Congress switches from Republican to Democrat, Cartwright's investment consulting director Sam Roberts says. "Supportive U.S. legislation helps at the margin, but it should not be the trigger to review strategy," he says. Roberts adds that the congressional switch makes the growing U.S. fiscal deficit even harder to change course, potentially making a case for scarce assets such as gold and bitcoin. Bitcoin is 0.1% higher at $80,253. (joseph.wilkins@wsj.com)
0454 ET - The U.S. midterms raises questions about foreign policy, but the strategic stalemate with China seems unlikely to budge until Trump is gone, says Arthur Kroeber at Gavekal Research. Beijing's control of rare earths makes it more or less impossible for Trump to escalate tariffs or export curbs beyond a likely round of levies under the Section 301 probe of excess capacity, which Beijing has signaled it will tolerate, Kroeber says. China's Xi will be quick to retaliate against any escalation but has made clear his desire for "constructive strategic stability"--at least for another year as he prepares for the Communist Party's 21st Party Congress next autumn, Kroeber adds. A truce also allows time to prepare for whatever China strategy the next U.S. administration might bring. (fabiana.negrinochoa@wsj.com)
0426 ET - The Democratic landslide in the U.S. midterms will change a lot in American governance, but not China policy--at least not in the short run, says Arthur Kroeber at Gavekal Research. Beijing and Washington's uneasy stalemate should persist, probably until the end of Trump's term. China lies far down Democrats' priority list, behind items such as inflation, AI regulation and the Iran war. "The party has no clear stance on China," divided by differing views of containment versus cooperation. "The Democrats will likely spend the next two years figuring out what China policy they want if they retake the White House, not trying to force big adjustments now." (fabiana.negrinochoa@wsj.com)
0411 ET - The medium- to long-term outlook for U.S. AI data centers likely involves builders offering more safeguards, local investments, and contractual commitments including electricity-bill protection, says Malik Ahmed Khan, senior equity analyst from Morningstar. Anthropic, with its focus on building AI for humanity and its high-profile spat with the DoW, may benefit from increased AI regulation under Democrats. The analyst doesn't expect any near-term impact on Anthropic's IPO, but says the dynamic warrants monitoring the next couple of years. (jiahui.huang@wsj.com; @ivy_jiahuihuang)
0408 ET - Shares of European defense companies are in decline after a mixed set of quarterly results and midterm election results that cast doubt on the extent of U.S. military spending going forward. Investors are concerned that Democrats' win of majorities in both chambers of Congress could jeopardize defense bills from which European contractors can also benefit through contracts to supply the U.S. armed forces. In Germany, Rheinmetall shares are down 17% after a second guidance downgrade, with Renk Group shares down 6% and Hensoldt's down 2%. France's Thales is down 0.9%. In Italy, Leonardo shares are down 2.8% even though the company raised its annual order guidance for the second time. The U.K.'s BAE Systems sheds 3%. (mauro.orru@wsj.com)
0402 ET - Bitcoin sentiment has shifted significantly since the U.S. midterms, says Derive.xyz. founder and CEO Nick Forster. "Election night was a textbook case of markets selling the uncertainty and buying the outcome," he says. Derive traders now price in a 55% chance of Bitcoin finishing above $80,000 Friday, versus 5% at its overnight low, and roughly 10% odds of falling below $78,000. The probability of Bitcoin exceeding $100,000 by Christmas rises to 5% from 3.5%, Forster notes. "Traders were paying a premium for protection ahead of the election, but once the results became clear, much of that demand disappeared." The question now is whether it can sustain its recovery once the short covering and hedge unwinding have finished, Forster says. Bitcoin last trades at $80,458. (fabiana.negrinochoa@wsj.com)
0354 ET - U.S. midterms have rippled across markets, but for Asian bonds, oil and the Fed matter more than the political arithmetic in Congress, says Rong Ren Goh at Eastspring Investments. "A durable decline in energy prices could ease inflation pressures, restore some flexibility to Fed policy and provide a powerful tailwind for Asian duration markets," he says. Conversely, another energy shock could keep U.S. yields elevated, pressure Asian currencies and introduce more vulnerabilities in regional credit markets. Rather than positioning solely for a divided U.S. government, Goh says Asian fixed-income investors should focus on the trajectory of energy prices, U.S. monetary policy and global risk sentiment. "The biggest market moves may come from what Trump does next." (fabiana.negrinochoa@wsj.com)
0342 ET - Oil prices hold near a two-month low after tumbling more than 8% in the previous session on hopes that a Democratic sweep in the U.S. midterm elections could accelerate efforts to end the Iran war. Brent crude is up 0.5% to $95.07 a barrel, while WTI futures tick 0.1% lower at $88.02 a barrel. The elections' outcome could bring greater scrutiny of the conflict and make funding the conflict more difficult, while also prompting opposition from within the Republican Party. Senate Democratic leader Chuck Schumer said Wednesday his party would seek to end the war, citing Congress's control over federal spending. Vice President JD Vance publicly blamed the conflict for Republican losses. However, "how all this plays out is still highly uncertain," analysts at ING say. "The degree and speed to which the oil market has sold off seems to be overdone." (giulia.petroni@wsj.com)
0338 ET - Yields on 10-year U.K. government bonds, or gilts, fall to their lowest in more than two months while 30-year yields hit a four-month low as inflation fears subside due to falling oil prices. Oil falls on greater prospects of a near-term resolution to the U.S.-Iran conflict following the Democrats' win at the U.S. midterm elections. The BOE is expected to raise rates in a decision at 1200 GMT. Still, investors now price a total of 95 basis points of Bank of England interest-rate rises by end-2027, down from 105bps priced on Monday, LSEG data show. Ten-year gilt yields fall to 5.101%, the lowest since August 28, LSEG data show. Thirty-year gilt yields drop to 5.554%. (miriam.mukuru@wsj.com)
0334 ET - Asia's key risks remain largely unchanged following U.S. midterm elections, according to UOB economists in a research note. Trade, tariffs, sanctions and foreign policy authority continue to reside with the executive branch, they say. "Tariff risks for Asian exporters persist despite Democratic control of Congress," the bank says. Congressional oversight of the U.S.-Iran conflict may increase, but support for a firm stance on China suggests limited changes to broader U.S.-China strategic competition, UOB says. (tracy.qu@wsj.com)
0331 ET - Copper prices edge lower in the aftermath of the U.S. midterm elections, as investors weigh the potential implications of a Democrat-controlled House for U.S. data-center investment, a key driver of demand for the industrial metal. "Texas, Georgia and Ohio elected Democrat candidates who have pledged to crack down on the building of data centers," analysts at ANZ say. The stakes are particularly high in Texas, which is on track to become the country's largest data-center hub, according to the firm. In early European trading, three-month copper futures on the LME tick 0.1% lower to $13,996 a metric ton. (giulia.petroni@wsj.com)
0313 ET - Gold futures rose to a two-week high in early European trading, supported by a weaker dollar and declining Treasury yields after the Democratic sweep of Congress in the U.S. midterm elections raised expectations of tighter fiscal discipline. New York futures climb 1.5% to $4,132.50 a troy ounce, with falling oil prices also lending support. Despite the rebound, the near-term outlook for the precious metal remains challenging. "Inflation concerns continue to support expectations for tighter monetary policy," analysts at ING say. "But much depends on developments in the Middle East and what they mean for energy markets." Meanwhile, silver futures rise 0.4% to $52.52 an ounce, while platinum is up 1.3% to $1,517.10 an ounce.
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