Market Overview
Global markets responded to the unexpected Democratic sweep in the US midterm elections, which fueled a relief rally in Australian equities and initially on Wall Street, while leading to a mixed and highly divergent response across Asian technology sectors. Expectations of congressional gridlock in the US prompted gains in US Treasuries and weakened the dollar. Concurrently, a significant plunge in oil prices, attributed to easing Middle East geopolitical tensions following US election commentary, provided additional support to risk-sensitive assets and tempered expectations for further Federal Reserve interest rate increases.
Within Asia, a clear bifurcation emerged in the technology space. Chinese and Hong Kong tech stocks surged on domestic support measures. In contrast, South Korean and Japanese chipmakers broadly declined amid concerns over the artificial intelligence (AI) infrastructure buildout and disappointing US chip earnings.
Markets
Australian equities rallied on Thursday, with the S&P/ASX 200 (^AXJO) closing at 9,065.10, up 2.61%, reaching a two-month high. This brings the index’s year-to-date gain to approximately 4%.
Asian markets presented a mixed picture in afternoon trading on Thursday. South Korea’s KOSPI Composite Index (^KS11) led declines, falling 6.03% in afternoon trading. A five-minute sell-side trading curb had been triggered earlier in the session. Japan’s Nikkei 225 (^N225) also moved lower, down 2.02%. Conversely, Hong Kong’s Hang Seng Index (^HSI) jumped 3.36%, while the Shanghai Composite (000001.SS) edged down 0.25%, and Singapore’s Straits Times Index (^STI) gained marginally by 0.07%.
In fixed income, US Treasuries saw gains in the prior US session. The US 10-Year Treasury (^TNX) yield closed at 4.894%, down 5.80 basis points, and the US 30-Year Treasury (^TYX) yield closed at 5.282%, down 4.20 basis points (both as of 04-Nov-2026). The US Dollar Index (DX-Y.NYB) traded lower at 101.26, a 0.246% decline. This provided support to the AUD/USD (AUDUSD=X), which gained 0.684% to 0.7016.
Crude oil futures edged lower on Thursday, with Brent Crude (BZ=F) down 0.35% at US$94.29 per barrel and WTI Crude (CL=F) down 0.93% at US$87.30 per barrel. Both had fallen more than 8% in the previous US session.
What Drove Markets
US Midterm Election Impact: The Democratic sweep in the US midterms unexpectedly prompted a relief rally, with investors pricing in potential policy implications. Expectations that congressional gridlock would stall big-spending initiatives led to gains in US Treasuries, which in turn knocked the greenback lower. CMC Markets’ head of dealing Sakis Paratsoukidis noted that some investors bet delays to data center rollouts could tighten capacity and give cloud businesses greater pricing power. This sentiment saw hyperscalers like Microsoft (MSFT) rally 6.68%, Amazon (AMZN) gain 6.12%, and Alphabet (GOOG) rise 3.25% on Wednesday (US time). However, concerns also emerged about a broader backlash to the AI infrastructure buildout, with Texas Governor-elect Gina Hinojosa having campaigned for tougher restrictions on data center development, contributing to a 9.90% decline in CoreWeave (CRWV).
Oil Price Plunge and Geopolitical Shifts: Oil prices experienced a significant plunge of more than 8% in the previous US session, reaching a two-month low. This decline followed US President Donald Trump’s statement that he had no plans to strike Iran, and Vice President JD Vance’s comments attributing Republican losses to the Middle East conflict. Lower energy prices boosted bond markets as investors scaled back expectations of further Federal Reserve interest rate increases, thereby supporting risk-sensitive assets.
APAC Tech Divergence: Asian technology markets exhibited a notable divergence. South Korean and Japanese chip and AI-related shares slumped amid concerns about the semiconductor outlook and potential curbs on AI infrastructure development. Qualcomm (QCOM) fell 6.5% after Wednesday’s closing bell despite reporting earnings above estimates, following a 5.33% gain in that day’s regular session. ARM (ARM) fell 5.28% during Wednesday’s regular session. South Korean semiconductor stocks, including Samsung Electronics and SK Hynix, as well as Japanese equipment makers like Advantest and Tokyo Electron, broadly extended losses. Jordan Watson, a portfolio manager at Tandem Investment Advisors, cautioned that the rally and rotation away from AI names could be temporary, calling for greater scrutiny of AI infrastructure spending and its expected returns. In stark contrast, Chinese and Hong Kong tech stocks, including Alibaba, Tencent, and Baidu, surged, with Chinese chipmaking stocks advancing due to the People’s Bank of China’s decision to cut interest rates on its relending facility and Beijing’s ongoing push to reduce reliance on US semiconductor technology.
Australian Market Strength and Sectoral Performance: The S&P/ASX 200 recorded a strong rally on Thursday, taking cues from Wall Street’s initial reaction. The technology sector saw significant gains, with companies like Xero (up 12.6%), WiseTech (up 7.5%), and TechnologyOne (up 5.3%) performing strongly. Data center operator NextDC surged 48% during Thursday’s trading after Goodman Group and Digital Realty sought to acquire up to 9.9% of the company, a move NextDC’s board called “opportunistic.” Miners, acting as proxies for AI sentiment due to their copper exposure, also rallied, with BHP (BHP.AX) gaining 6.19% and Rio Tinto (RIO.AX) up 6.98%. Gold producer Northern Star popped 9.9%. Conversely, energy stocks were the worst performers following the plunge in oil prices, with Woodside (WDS.AX) plummeting 6.02% to its lowest level since July, despite announcing job cuts, and Santos falling 5.4%. Banks presented a mixed picture: NAB (NAB.AX) plunged 5.37% on disappointing full-year results, while Westpac (WBC.AX) fell 1.00% and ANZ (ANZ.AX) was down 0.64%, and Commonwealth Bank (CBA.AX) closed flat, up 0.018%.