What moved
- US (closed Tuesday): Before the election results came in, the S&P 500 ended 0.36% higher at 7,568.92 and the Nasdaq Composite rose 0.83% to 25,372.01. The Dow slipped 0.38% to 51,786.72. US cash markets are shut. Futures are the only live read: S&P 500 futures are down 0.23% and Nasdaq 100 futures are down 0.32%, well off their overnight lows.
- Europe (closed Tuesday): The FTSE 100 fell 1.14% to 10,638.43. The DAX lost 0.45% and the Euro Stoxx 50 lost 0.51%.
- Asia: The Nikkei closed 1.42% lower at 62,188.63, having been down about 4.5% at its worst. The Kospi turned an early loss of nearly 4% into a 0.62% gain at the close, while Taiwan finished 0.83% lower. China went the other way: the Hang Seng is up 1.42% and the Shanghai Composite is up 2.16% in late trade.
Why
The night's story was Washington. As results came in, networks projected that Democrats would take the House, and Senate projections leaned their way too. Futures sold off hard, with tech taking the brunt. The worry is that a Democratic Congress means tighter scrutiny of Big Tech and AI, and more friction for data-centre construction, which is a sensitive point for a sector priced for heavy AI spending. A second line of thinking also hit stocks while helping bonds: gridlock limits fiscal stimulus. That helped Treasuries and weighed on the dollar.
Japan was the hardest hit. It was back from Tuesday's holiday, so it was catching up on two sessions at once. Chip-equipment, memory and SoftBank-linked names led the fall, overshadowing strong overnight results from AMD. Much of the move had reversed by the close, as it had in Seoul. We don't have a single clean catalyst for the turn; it looks more like a market deciding the first reaction went too far.
China is running on its own story. Beijing has made its share-buyback relending tool permanent and cut its rate to 1%, and applications have passed 200bn yuan. That is putting a floor under a market that had a bruising October, even though the scheme does little directly for tech. Tuesday's FTSE weakness came from miners, as copper and gold slid, and from banks.
Sentiment & risk appetite
The mood is nervous rather than panicked. The VIX ended Tuesday at 20.83 and the MOVE index of bond volatility at 99.97. Neither is calm, but both sit far below their 52-week peaks. Tuesday's US gain was narrow. Technology (+1.31%) carried the index while staples (-2.07%) and materials (-2.01%) fell, and PrimerIQ's count across our US universe had decliners outnumbering advancers 3,238 to 2,755. London was weaker still, with 558 decliners to 264 advancers. Overnight, the defensive move went into gold rather than the dollar: gold is up 2.33% at $4,032.30 and the dollar index is down 0.38% at 101.484, which lifts sterling 0.47% to $1.3473.
Economic calendar
This morning's 07:00 London window brought company results rather than market-moving UK data. The bigger domestic test is Thursday's Bank of England decision, where markets have all but fully priced a quarter-point hike.
Overnight, China's services PMI eased to 50.8 for October, only just above the 50 line that separates growth from contraction. New Zealand's third-quarter unemployment rate rose to 5.7%, above the 5.5% expected. That came after Tuesday's Reserve Bank of Australia hike to 4.85%.
Still to come today in the US are the ADP private payrolls report at 08:15 ET (13:15 GMT) and the ISM services survey at 10:00 ET (15:00 GMT). ISM services read 54.9 last time. Both will be judged against a bond market already repricing the fiscal outlook. Final election tallies, especially the Senate, will run through the day.
Earnings
Marks & Spencer led London's 07:00 releases. First-half adjusted pre-tax profit more than doubled to £403.2m, ahead of consensus of about £399m, and full-year guidance is in line with expectations. However, clothing and home profit fell, and the company said that market remains challenging. In the US, AMD's results after Tuesday's close beat expectations and came with a higher outlook, but the AI sell-off in Asia drowned out the good news.