Democratic sweep in US midterms rattles Asian stocks, lifts gold
Democrats took control of both chambers of the US Congress in the midterm elections, prompting Asian markets to react as investors weigh tighter oversight of AI spending and federal debt issuance. Stocks across the region closed mixed, US Treasury yields fell and gold rose.
The Democratic Party flipped several Republican-held Senate seats, including in North Carolina, South Carolina, Ohio, Texas, Kansas and Iowa, clearing the 51-seat threshold needed for Senate control, according to Associated Press projections. The party also secured a majority in the House of Representatives, surpassing the 218-seat mark faster than in the two previous midterm cycles.
The dual-chamber win gives Democrats expanded oversight powers, including the ability to subpoena testimony and pursue impeachment proceedings, raising the prospect of closer congressional scrutiny of the artificial intelligence industry and of federal spending under President Donald Trump.
Asian equity markets closed mixed on Wednesday as traders tried to gauge the fallout, with Japanese technology shares among the decliners before South Korean stocks pared losses later in the session.
US Treasury yields declined as investors bet that a Democratic-controlled Congress could act as a check on further debt issuance by the Trump administration. Gold prices moved higher as part of the broader market response.
Trump, in comments to Fox News, said he did not see the results as a rebuke of his presidency, noting that he “wasn’t on the ballot.” A spokesperson for China’s foreign ministry described the midterm outcome as an internal US matter, while saying Beijing was willing to deepen communication with Washington.
Why it matters for markets: A shift in the balance of power in Washington changes expectations for US fiscal policy and regulatory oversight of the AI sector, which can influence US Treasury yields, the dollar, and risk appetite across Asian equities, with knock-on effects for safe havens such as gold.
Sources: SCMP Business; Nikkei Asia; Nikkei Asia