S&P futures fall 0.5%, Nasdaq 0.9% as US election results awaited
Key Facts
S&P 500 and Nasdaq futures fell on Wednesday, 4 November, as investors awaited results from the US midterm elections; S&P futures were down 0.5% and Nasdaq futures 0.9%, according to a Reuters report. In Asia, the Nikkei fell 1.5% after the Japanese market returned from a holiday, while the Asia-Pacific shares index excluding Japan rose 0.4%. Early results showed a divided race for Congress: Democrats were favored to win the House of Representatives, while the Senate contest remained closely fought between the two parties. The move in US futures came as results continued to emerge, rather than representing a final election outcome. A Pepperstone analyst said the size of the majority and how far the result differed from expectations could be the most important factors in the market's reaction.
Reuters said Democrat Jon Ossoff won re-election in Georgia, the first major election race to be called that night. The Senate remained a major focus, with at least 9 races considered competitive between the two parties. A total of 35 seats were contested in Tuesday's 3 November elections, and Democrats won the first of the contested seats. Democrats were favored to win the House of Representatives, while the Senate race had not been decided at the time of Reuters' report. Chris Weston, a Pepperstone analyst, said, "The biggest market reaction may not come from which party wins Congress, but from how decisive its victory is."
Asian markets diverged between Japan and the rest of the region: the Asia-Pacific shares index excluding Japan rose 0.4%, led by South Korean stocks, which gained more than 2% in early trading. By contrast, the Nikkei lost 1.5% in Wednesday trading after dealings resumed following the holiday. Reuters linked some of the improvement in Asian technology shares to strong results from AMD, which eased some concerns about the sustainability of AI-related trading. The company also forecast faster-than-expected growth in 2027 as data-center sales surged, and reported third-quarter results that beat market expectations. These developments supported sector shares as investors continued to await the US election results.
The moves followed cautious trading ahead of the election; on Tuesday, 3 November, the Dow Jones fell 0.38%, while the S&P 500 rose 0.36% and the Nasdaq Composite gained 0.83%. In Europe, the Stoxx 600 fell 0.58%, and the MSCI gauge of global shares declined 0.06% in the same session. Wasif Latif, chief investment officer at Sarmaya Partners, said the election was the third major event markets had been watching over 3 weeks, after the Federal Reserve meeting and earnings season. He added that earnings season had been good overall, but rising interest rates had begun to weigh on the market's appetite for financing more of the big technology companies' spending through borrowing. He said the market may not yet have priced in the possibility of tighter scrutiny of data centers.
In bond and energy markets, the yield on 10-year US Treasuries rose 5.36 basis points to 4.948% on Tuesday, 3 November, while Brent crude futures fell 1.12% to settle at $103.60 a barrel. Those moves came in a session before the election results began to emerge, while investors remained focused on the implications for legislative control and US policy. Technology shares had come under pressure the previous week; the S&P 500 fell 1.8% on Friday, 30 October, its worst day since June, and the Nasdaq Composite dropped 2.9%. The Dow Jones lost 572 points, or 1.1%, as the sell-off in technology shares deepened and concerns grew over AI valuations. On that date, the US stock market was 3.1% below its record high.
The backdrop to the wait also included the Nikkei's performance in earlier sessions; an Associated Press report said the index fell 2.1% on 30 October after the Bank of Japan's decision to hold interest rates steady. US shares also declined on Tuesday, 3 November, ahead of the vote, with control of the Senate unresolved in polls and nonpartisan forecasts. Latif said markets had been weighing the Federal Reserve meeting and earnings season over the previous three weeks, followed by the election. The weekly jobless claims report is published by the US Department of Labor's Employment and Training Administration. On 29 October, the department said seasonally adjusted initial claims for the week ended 24 October totaled 194,000, down 1,000 from the previous week's revised level.