Democrats take Congress; futures and Europe rally as yields, oil and dollar ease

US futures are the only live read on the American day: at 08:45 ET, S&P 500 futures were 1.12% higher at 7,681.50 and Nasdaq 100 futures 0.47% higher at 28,438.50. Tuesday's cash session ended mixed, with the S&P 500 up 0.36% at 7,568.92, the Nasdaq Composite up 0.83% at 25,372.01 and the Dow down 0.38% at 51,786.72. The S&P closed 3.51% below its 52-week high and the Nasdaq 8.48% below.

Europe has kept climbing and was at the top of its day's range at 13:40 GMT: FTSE 100 up 1.79% at 10,828.36, DAX up 1.96% at 26,372.80, CAC 40 up 2.12% at 8,190.58, Euro Stoxx 50 up 2.02% at 6,268.91. Asia finished split: the Nikkei closed 1.42% lower at 62,188.63, while the Hang Seng ended up 1.67% at 23,919.50 and Shanghai up 2.16% at 3,686.17.

Democrats won both chambers, and the overnight sell-off did not last. Futures first fell on fears of tougher AI regulation, then reversed as President Trump struck a conciliatory tone, AMD's outlook landed and traders cashed in election hedges. The clearest reaction is in rates. Divided government is read as limiting fiscal expansion, so less pressure from new borrowing has the 10-year yield 3.3bp lower at 4.919%. The dollar index is down 0.57% at 101.29. Both help gold, which pays no income; it is up 2.95% at $4,056.50.

The gap between S&P and Nasdaq futures is the AI argument. AMD expects 2027 revenue growth above 80%, against the 77% analysts forecast, easing fears about AI spending, but data-centre names such as CoreWeave and Oracle are lower pre-market on regulatory risk. Chinese shares had their own driver: state-linked ETF buying and cheaper central-bank loans for buybacks.

Oil is a second tailwind, particularly for energy-importing Europe, where banks led early gains. Brent is down 2.31% at $101.21 and WTI down 2.26% at $93.92 after Trump played down immediate strikes on Iran. That is hope rather than settlement: a senior Iranian official says the sides remain far from agreement. How much of Europe's rally belongs to oil, yields or the election cannot be cleanly separated.

The VIX has dropped 12.24% to 18.28 as election hedges come off. Its bond-market equivalent, the MOVE index, last closed at 99.97 on Tuesday, so it has yet to register the result. Gold rising alongside equities mostly reflects a softer dollar and lower yields rather than fear, and copper, flat at $6.378, is not signalling a growth surge. The US tape was narrow going in: on our count across PrimerIQ's US universe, decliners beat advancers 3,252 to 2,764 on Tuesday even as the S&P rose, with the technology sector fund up 1.31% and staples down 2.07%.

ADP's 08:15 ET report showed private payrolls up 86,000 in October, above the 69,000 expected, with September revised to 86,000 from 90,000. At 08:30 ET, the September trade deficit came in at $105.0bn, narrower than August's revised $105.7bn and the $107.9bn forecast. Treasury's refunding, also at 08:30 ET, offers $125bn of securities and anticipates holding nominal coupon auction sizes for the next several quarters, which removes a near-term supply worry for long bonds. The 10-year yield remains lower.

The ISM services index follows at 10:00 ET, with consensus at 54.8 against 54.9 in September; above 50 signals expansion. No Fed speakers are scheduled. The bigger data point is Friday's official jobs report, forecast at 65,000 payrolls with unemployment at 4.2%. ADP has been a poor guide to it.

Datadog has drawn the sharpest reaction, falling steeply pre-market despite adjusted EPS of $0.81 against $0.64 expected, because fourth-quarter revenue guidance of $1.19bn–$1.20bn fell short. Uber's $0.25 headline EPS overstates the damage, since it includes a $476m loss on revaluing equity stakes against $0.88 adjusted, but the shares are lower on a soft fourth-quarter profit forecast. McDonald's beat at $3.57 against $3.38 and has gained even as US comparable sales slipped 0.2% on falling guest counts, while CVS has slipped despite beating at $2.09 against $1.65, raising its adjusted profit forecast to at least $8.20 and announcing a split into two companies by the first half of 2028.