AI stocks, oil fall as investors bet onchange after US election ‘blue wave’

Chip stocks and the dollar fell on Thursday, while oil steadied around recent lows and broader share prices, gold and other assets rose after a sweeping Democratic victory in US midterm elections raised hopes for an end to the US-Iran ​war.

Brent crude futures dived nearly 9% overnight, falling below $100 a barrel for the first time in two months. The price has dropped by about 20% so far this week, heading for ‌its largest weekly loss since April 2020.

Tumbling energy prices ‌encouraged a rally in bonds, which lowered US yields, kept the dollar around one-month lows against the euro, and helped stocks.

The MSCI All-World index was up 0.1%, having posted its biggest one-day gain since late July on Wednesday. In Europe, the STOXX 600 rallied another 0.7%, bringing the index to within ​a whisker of August’s record high.

“When it comes to the headline result, it’s not too different from investor expectations beforehand, even if the scale of the Democratic victory was bigger than expected,” Deutsche Bank strategist Jim Reid said.

“In many respects, the overall rally fits into the classic midterm pattern we’ve previously highlighted. After all, in 20 out of 20 midterm elections since World War Two, ​the S&P 500 has been higher one year later,” he said.

Overnight on Wall Street, the benchmark indexes rallied as investors took heart from the clear outcome, with the S&P 500 closing 1.6% higher, although tech stocks continued to struggle as ​investors fear greater scrutiny over AI infrastructure build-out.    

The Philadelphia semiconductor index fell 3.1%, having lost a quarter of its value in a month.

Democratic data-centre opponents ​who campaigned, in part, on moratoriums on data centre construction won victories in Texas and Georgia.

Futures on the Nasdaq 100 were down 0.7%, while those on the S&P itself fell just 0.1%.

Tech stocks in Europe make up a smaller part of the broader market, which is more heavily dominated by banking shares and drugmakers. Those sectors jumped on Thursday. Within the regional tech sector, semiconductor-exposed stocks such as ASML, Soitec and Infineon fell between 1.2% and 4%. 

Asian markets, which are heavily exposed to AI-related stocks, suffered losses, with South Korea’s chipmaker-heavy KOSPI down nearly 6% near seven-month lows.

Masahiko Loo, chief fixed income strategist at State Street Investment Management, said Democratic control raises the prospect of tougher scrutiny around data centres, power demand and consumer costs, but does not mean a free hand as President Donald Trump retains veto power.

“The blue wave therefore raises the political risk premium around US AI without necessarily derailing the broader AI capex cycle,” he said.

Renewable energy stocks, which have been targeted by the Trump administration over the past almost-two years, rallied, with Denmark’s Orsted and Vestas up 2.6% and 1%, respectively.

Crude oil, meanwhile, was last up 0.8% on the day, at $95 a barrel, having lost nearly 10% in two days, as traders chose to bet that Trump, facing a Democratic Congress and hurt by high energy prices caused by the Mideast conflict, would be less likely to escalate the war with Iran.