Global stocks staged a recovery as investors processed the implications of a Democratic election victory in the US. Overnight, stock markets had fallen amid concerns that a Democratic control of both the Senate and the House would lead to increased regulatory scrutiny of artificial intelligence businesses and a higher likelihood of political gridlock.
The Nasdaq index is now anticipating a 0.2 percent rise at the market open, with S&P 500 futures showing a 0.23 percent increase. The earlier sell-off had put pressure on the dollar, with the euro gaining 0.48 percent to $1.1249 and sterling rising 0.51 percent to $1.3480, resulting in a 0.5 percent drop in the dollar index.
In bond markets, the two-year US Treasury yield fell 3.5 basis points overnight, trading down 0.01 points at 4.606 percent. Gold prices saw a rally of 2.73 percent, reaching $4,305.
Technology stocks, particularly those involved in artificial intelligence, are expected to be under scrutiny. The AI boom has been a significant driver of global market growth in recent years, but potential policy changes and existing concerns over AI spending could impact stock values. Analysts suggest that a Democratic sweep could lead to greater regulatory oversight for the sector, especially concerning data centers. Some experts believe that curbs on AI development could temper economic growth, posing a challenge for the US stock market, which has become increasingly reliant on the returns from this emerging technology.
Asian markets initially saw AI stocks decline, with chipmakers Samsung and TSMC experiencing sharp drops. South Korea's Kospi index fell 3 percent before closing higher, while Japan's Nikkei decreased by 1.4 percent. European markets showed more positive movement, with the FTSE 100 rising 0.27 percent due to its limited exposure to the technology sector. France's main index climbed 0.31 percent, and Germany's rose 0.44 percent.
The election outcome may also influence the US fiscal outlook. A Democratic-controlled Congress could constrain the legislative agenda concerning taxes and fiscal stimulus. However, with the president retaining veto power, the scenario points towards potential political confrontation and legislative gridlock rather than immediate policy reversals.
Oil prices continued their downward trend, with Brent crude falling 0.45 percent to $104.07, following a four-week low in the previous session. Hopes for diplomatic breakthroughs regarding oil supply remain uncertain, contributing to the price decline.