Market Briefing: Election Impacts Shift from Congress to State House Policy

Wednesday, November 4, 2026 | Daily briefing on Democratic midterm wins, data center moratoriums, bond rallies, and gold’s $4,000 surge.

Daily SummaryOur View: The primary significance of the election outcome for the market is not Congress,but the governorships: Democrats flipped the Texas governorship, and the new governor is proposing a moratorium on data center construction. Texas accounts for roughly 26% of planned U.S. data center projects.On the congressional side, Trump’s veto power remains intact, and Democrats do not possess a veto-proof majority, making it difficult to pass federal-level legislation; however, roadblocks can be erected locally through water, electricity, and zoning rules. Therefore, we read the sell-off as a repricing, not a panic. State Street’s warning is spot-on: the primary risk is not a blue wave, but investors overreacting to it. Saxo’s note provides balance: falling bond yields could offer relief over time, meaning the initial sell-off may not be permanent.Bitcoin touched 75,700 before recovering; holding above 77,000 is a positive sign.

• Democrats captured both chambers of Congress. They won Senate races in South Carolina, Texas, and Ohio, making headway in long-standing safe Republican territory. Nasdaq futures dropped over 2% at one point, the dollar retreated, and bonds rallied.
• The real issue is the Texas governorship. Democratic candidate Gina Hinojosa won the seat and is proposing a moratorium on data center construction; according to Jefferies, Texas hosts approximately 26% of planned U.S. data center projects.
• However, passing legislation will be difficult. Trump’s veto power remains, and Democrats lack a veto-proof majority in the Senate. Hurdles will emerge less from federal laws than from local permitting, water,and power regulations.
• Bonds won: The 10-year yield dipped to 4.90%. TD Securities notes that as markets reexamine the AI trade and price in the possibility that additional tax cuts are shelved, bonds are the clear winners. The two-year yield hit a two-month low; the futures market wiped out expectations for a 6-basis-point rate hike next year.
• The bill for crypto political spending came due. Fairshake and affiliated committees spent $63 million against Sherrod Brown in Ohio, and Brown won. The sector spent a total of $176 million this election cycle, with $75 million of that going to two races it lost.
• Musk spent $475 million, and most of the candidates he backed lost. Tesla and SpaceX shares fell over 6% after hours; while their exposure to data center restrictions is indirect, the risk of political scrutiny has increased.
• Gold broke above $4,000, reaching 4,011.70. A weaker dollar and falling real yields provided support; according to StoneX, $4,000 is the clear resistance, and the direction of the breakout will dictate gold’s next major move. Silver rose 2.99%, and palladium gained 4.25%.
• Today: Eurozone October inflation, the U.S. October ISM survey and September trade balance; Sweden’s central bank rate decision; the U.S. Treasury quarterly borrowing plan; ECB Chief Economist Philip Lane speaks.

Story of the DayThe Market Address of the Election: Governorships Tuesday’s midterm elections resulted in Democrats capturing both chambers of Congress, and the market response was swift: Nasdaq futures dropped over 2.3% at one point, S&P 500 futures fell 1.3%, the dollar index dropped 0.42% to 101.44, and the U.S. 10-year yield fell 6 basis points to 4.90%. However, the primary market impact of the outcome is not at the federal level. A Reuters morning note puts it clearly: analysts point out that passing regulations will be difficult because Trump has promised to veto any legislation and Democrats lack a veto-proof majority in the Senate; however, Democrats also won a surprising number of governorships, granting them greater power at the local level to block data center construction and impose rules on water and electricity requirements.

Consequently, the single most important election outcome was the Texas governorship. Incumbent Governor Greg Abbott conceded defeat, and Democratic candidate Gina Hinojosa won the race. Hinojosa advocates for a moratorium on new data center construction until regulations governing the industry are established. Scale makes this decision critical: according to Jefferies, Texas hosts roughly 26% of planned U.S. data center projects. Moomoo ANZ Head of Market Strategy Tapas Strickland broadens the picture: Texas and Georgia account for about one-third of all AI data center spending and projects; if both flip to Democrats at the gubernatorial level, there is ample potential for a slowdown, which will clearly ripple across the rest of the AI sector. The Georgia governorship was also won by Democrat Keisha Lance Bottoms. Mirae Asset Securities analyst Kim Seok-hwan views the same risk from the chip side: if Texas declares a moratorium on data centers much like New York did, projects could face further delays; today’s market reaction clearly reflects anxiety and uncertainty surrounding these issues.

However, an important caveat exists: the risk is not entirely new. Republican Governor Abbott had already suspended certain data center permits in September due to concerns over electricity costs, water consumption, and grid reliability. Companies with high exposure to Texas include Galaxy Digital (housing CoreWeave on its Helios campus), IREN, Cipher, and Riot Platforms; power suppliers NRG and Vistra, along with equipment providers Vertiv and Eaton, could also be affected, while Nvidia and AMD have more indirect exposure.

The Musk front tells a separate story: Musk spent over $475 million to back Republicans in the midterms, and most of his endorsees lost on Tuesday night. Tesla and SpaceX dropped more than 6% in after-hours trading.Longbow Asset Management CEO Jake Dollarhide sums up the reason: Musk was the last hope for Republicans, but the heavy cash flow deployed to support red states could not override high electricity bills and prices at the grocery store and gas pump.

Counterarguments: The Risk of Overreaction There is a sharp divergence of opinion regarding the magnitude of the market reaction, which must be considered when positioning today. State Street Global Advisors Chief Investment Strategist Michael Arone delivers the shortest and sharpest warning: the biggest risk for markets is not the blue wave itself, but investors overreacting to the blue wave. Siebert Financial Chief Investment Officer Mark Malek strikes a similar tone: it is a bit early, but at the end of the day, much of this has already been priced into markets; expecting some volatility overnight and into tomorrow, but nothing crazy or unusual—2016 was worse. The real excitement would have come if Republicans had unexpectedly scored massive wins.

A second framework questions how much of the outcome actually stems from the election. JPMorgan Asset Management APAC Chief Market Strategist Tai Hui poses the question directly: how much of this is truly the election, and how much is the AI narrative that has been brewing for three to four weeks? He believes it is the latter, not a political narrative. Monex Group Managing Director Jesper Koll points in the same direction: AI momentum had turned negative regardless of whether Republicans held a majority or not; financial markets entered this election with an already negative stance on AI, particularly in equities, and the election outcome has little to do with it. Criticisms and concerns regarding AI extend far beyond politics. Koll is also cautious regarding policymaking: this is fundamentally a presidency driven by executive orders; he personally doubts that Democrats taking Congress will heavily impact actual policymaking. There will be more noise, such as impeachment or corruption investigations, but will Trump’s governing style change? His answer is no. Hui points to a positive surprise: in a divided government, fiscal deficits being far more controlled or limited could serve as an upside surprise.

Saxo Head of Investment Strategy Charu Chanana presents the mechanism and potential outcome together:markets appear to be pricing in the possibility of a stronger-than-expected Democratic performance, which could reduce expectations for additional fiscal stimulus, explaining the weaker dollar and pressure on equities.The sharper drop in Nasdaq futures reflects anxiety that a shift in political control could increase regulatory scrutiny on AI and big tech—at a time when investors are already questioning high valuations and surging AI spending. Her crucial addition, however, is that falling Treasury yields could offer some relief over time,meaning the initial sell-off may not prove sustainable. Indeed, this played out overnight: bitcoin dropped as high as $75,700 before rebounding above $77,000, and Nasdaq futures clawed back a portion of their losses.

Vantage Point Asset Management CIO Nick Ferres frames it by scale: the Goldman Sachs Broad AI Basket fell 15% in October and sits more than 24% off its peak, with the Nasdaq tracking it downward. Risks center around tighter regulation of the AI and crypto complex, alongside upcoming battles over the debt ceiling and potential impeachment efforts.

The Crypto Sector’s Election Bill Yesterday we addressed the inconsistency in the crypto sector’s political spending; the results validated that analysis. It was a mixed night for crypto political action committees: while most candidates they backed won uncompetitive races, Fairshake, Fellowship, and Digital Freedom Fund lost in the critical contests where they invested the most. Fairshake and the Digital Freedom Fund spent over $63 million against Sherrod Brown in the Ohio Senate race, and Brown defeated Jon Husted to return to the Senate. The Digital Freedom Fund also donated $400,000 to Ashley Hinson in Iowa, who lost to Democrat Josh Turek. In Illinois, Juliana Stratton won the Senate race despite Fairshake spending over $10 million in the primary to oppose her. In Texas, Ken Paxton—backed by Cantor Fitzgerald and supported by stablecoin issuer Tether-linked Fellowship committee with $3.8 million in the primary—lost to James Talarico.

The aggregate picture: committees spent a total of $176 million across dozens of races in the 2026 primary and general elections, with the bulk supporting safe candidates guaranteed to win uncompetitive races; however, roughly $75 million went to two races the sector lost. There were a few bright spots: Barry Moore in Alabama, Harriett Hageman in Wyoming, and Mark Warner in Virginia won. Hageman succeeds Senator Cynthia Lummis, one of the crypto sector’s strongest allies. In Kentucky, Andy Barr captured the Senate seat vacated by Mitch McConnell.

However, the outlook for the sector’s legislative agenda has grown more difficult: House Financial Services Committee Chairman French Hill also faced a tough race, making the passage of the crypto market structure bill (Clarity Act) during this Congress a much lower probability. For investors in Turkey, the takeaway is that regulatory uncertainty extends into 2027, which could slow down the momentum of institutional crypto products; yet Risk Dimensions’ counterargument from yesterday still stands—adoption can continue to advance through regulatory bodies and major financial institutions.

Market Round-Up

Equities Wall Street closed Tuesday mixed, with the primary action occurring in post-election futures: the S&P 500 rose 0.36% to 7,569, the Nasdaq 100 gained 0.68% to 28,180, while the Dow lagged, dropping 0.38% to 51,787. The VIX fell 1.51% to 20.83, though its monthly gain stands at 34.21%. During the session, chip stocks had rebounded: AMD rose 3.65% to $483.90, Nvidia gained 2.29% to $206.69, Microsoft climbed 2.74% to $520.99, and Meta added 2.36% to $621.03. Apple slipped 1.90% to $331.90 amid lingering effects of memory chip cost warnings, leaving the stock 5.6% below its 52-week high. The table turned once election results began rolling in: S&P 500 futures fell 1.3% and Nasdaq 100 futures dropped 2.3%, before losses were partially pared. Tesla and SpaceX dropped over 6% in after-hours trading. U.S. futures are trading down 0.6%–0.8% today.

Asia fell sharply on Wednesday: the MSCI Asia Pacific Index dropped nearly 2%. Japan’s Nikkei sank 2% to 61,817, hitting a more than five-month low led by AI proxy SoftBank, leaving the index 15.1% below its 52-week high. Taiwan fell 0.83% to 42,949 (14.1% off its peak, with an RSI of 29.1 in oversold territory). Korea’s KOSPI traded flat, edging down 0.24% to 5,662 as Samsung, SK Hynix, and TSMC dropped sharply. In contrast, China diverged: Hong Kong’s Hang Seng rose 1.02% to 23,766, and the Shanghai Composite climbed 1.14% to 3,649.

European futures are down 1.4%; on Tuesday, the DAX closed down 0.45% at 25,865, and the CAC 40 lost 0.34% to 8,020. Brazil’s Bovespa dropped 1.43% to 165,529 (RSI at 24.1 in deep oversold territory, 21.1% below its peak). The BIST 100 rose 0.56% to 11,024 for a second day of recovery, with its RSI ticking slightly out of oversold at 31.9, though the index remains 27.5% below its 52-week high.

Foreign Exchange The dollar index fell 0.42% to 101.44, marking the primary FX impact of the election outcome. Reuters explains this through two channels: falling yields and reduced expectations for next year’s rate hikes pushed the dollar broadly lower, benefiting primarily the yen, euro, and Swiss franc. The euro rose 0.43% to 1.1240, sterling gained 0.40% to 1.3463, the Swiss franc strengthened nearly 0.8% into the 0.8144–0.8169 band, and the yen strengthened 0.7% to 157.55 (though listed flat at 157.99).

A notable technical detail on the bond side: the two-year yield dropped about 8 basis points to a two-month low, and the futures market priced out roughly 6 basis points of rate hike expectations for next year. Despite this, the probability of a December hike remains at 78%. Monex’s Koll projects a contrary effect over the long term: at the margin, he views this as positive for the dollar because the market’s perception of Fed independence will come to the fore. The Australian dollar sits at 0.6987, the New Zealand dollar at 0.5607, and the Canadian dollar at 1.3964. USD/TRY breached the 50 level for the first time at 50.01, with its RSI remaining at an extreme overbought reading of 98.5.

Commodities Oil rallied in a volatile session: Brent rose 82 cents to $104.42, and WTI added 50 cents to $96.59, reversing earlier losses (though appearing on tables at $103.46 and $95.88 respectively, with Brent posting a 9.15% weekly loss). In the previous session, Brent closed at a four-week low. Phillip Nova Head of Market Insights Priyanka Sachdeva sums up the picture: Trump’s mixed signals—continuing military strikes while downplaying further escalation—have made it difficult for traders to establish a clear directional conviction. Following October’s sharp rally, some profit-taking and speculative long reduction appear justified,but underlying supply disruption risks around the Strait of Hormuz have not vanished.

The U.S. carried out “defensive” strikes on Tuesday targeting surface-to-air missiles used against U.S. assets on Iran’s Qeshm Island; another official noted the strikes appeared limited and did not signal a return to major combat operations. Trump told the Financial Times that the U.S. has no immediate plan to attack Iran, though a senior Iranian official told Reuters the two nations remain far from a deal to end the conflict. Support on the supply side materialized: according to American Petroleum Institute data, crude inventories fell 5.27 million barrels for the week ending October 30, whereas eight analysts had estimated an average build of 880,000 barrels; distillate inventories also fell 1.19 million barrels.

Precious metals were the biggest beneficiaries of the election outcome. Gold rose 1.81% to $4,011.70,reclaiming the $4,000 threshold; silver gained 2.99% to $51.07, palladium rose 4.25% to $969.50, and platinum climbed 1.19% to $1,449.40. Pepperstone Head of Research Chris Weston outlines the driver: a weaker dollar alongside sharp drops in both nominal and real U.S. Treasury yields are clearly supporting gold; additionally, demand for a hedge against a potentially more unpredictable and confrontational Trump administration appears to provide a convincing foundation for gold buyers. StoneX Senior Analyst Matt Simpson specifies the level: $4,000 is the clear resistance, and a breakout in either direction from this band could dictate gold’s next serious move.

Nonetheless, metals are climbing out of a deep hole: palladium’s RSI sits at an extreme 16.5 in oversold territory, resting 55.3% below its 52-week high, with silver down 57.9% and platinum down 49.2%. A demand note: according to the World Gold Council, India’s gold demand is expected to hit a six-year low in 2026 as high prices weigh on jewelry sales. Copper slipped 0.18% to $6.37 with a weekly loss of 3.85%; natural gas stands at $2.88.

Crypto Bitcoin experienced wild volatility on election night: trading near $78,000 on Tuesday evening as Americans voted, it plummeted over $2,000 to touch $75,700—its lowest level since September 15—before buyers pushed prices back above $77,000. Wednesday morning finds it at $77,876, up 1.68% over 24 hours.The recovery arrived alongside an improvement in Nasdaq futures, indicating that the market shook off the initial shock of a Democratic sweep and refocused attention on the broader economy and institutional capital flows.

Among majors, ZEC rebounded 5% toward $1,200, reversing part of Tuesday’s 10% drop; XRP rose 2.16% to 1.2769, Ether gained 2.14% to $2,294.17; Solana rose 1.52% to $92.92, though its RSI sits deep in oversold at 28.6 and 25.6% off its 52-week high; BNB dropped over 1% to $689, making it the weakest of the group.

The election holds two distinct implications for crypto. First, regulation: as BTSE COO Jeff Mei noted on Monday, Democrats oppose the Clarity Act—the legislation meant to determine how U.S. crypto markets are regulated and which agency oversees which token. Consequently, the probability of the bill passing in this Congress has dropped, extending uncertainty into 2027. Second, direct price impact: Trump-associated tokens plummeted. The “Official Trump” token trading on Solana and TRON lost over 5% to hover around $1.50; the token peaked above $75 shortly after its launch in early 2025, meaning it has shed over 98% of its value.World Liberty Financial’s WLFI token, linked to Trump, also dropped 2%.

A third channel runs through Texas and impacts mining: facilities belonging to companies such as Galaxy Digital (housing CoreWeave on its Helios campus), IREN, Cipher, and Riot Platforms are located in Texas, and a potential moratorium would directly impact their expansion plans. This Friday’s U.S. employment report serves as the next macro catalyst; the market prices a 78% probability of a Fed rate hike in December.

Second Story: The Bond Market as the Clear Winner of the Election Tuesday night’s most definitive winner was the bond market, and reading its drivers together outlines the upcoming macro framework. The U.S. 10-year yield fell 6 basis points to 4.90%, while the two-year dropped roughly 8 basis points to a two-month low. TD Securities Senior Rates Strategist Prashant Newnaha builds the logic: bonds emerged as clear winners as markets reexamined the AI trade and priced in a higher probability of shelved additional tax cuts and slower public spending. Newnaha points to a second factor: tighter regulatory scrutiny on tech and AI companies, alongside the prospect of political gridlock, arriving hand-in-hand with a Democratic sweep.

The mechanism rests on three pillars. First, fiscal: a divided government makes additional tax cuts and spending increases difficult, alleviating federal borrowing anxiety; JPMorgan’s Tai Hui characterizes much more controlled fiscal deficits as an upside surprise. Second, growth: hurdles placed in front of data center construction could slow the primary engine of U.S. economic growth, which in turn reduces inflationary pressures; federal funds futures priced out roughly 6 basis points of rate hike expectations for next year based on this logic. Third, supply: the U.S. Treasury’s quarterly borrowing announcement is slated for today, and the market anticipates fewer long-term issuances.

This triad serves as a continuation of the bond rally observed throughout October; the 10-year yield dropped 37 basis points in October, marking its largest monthly decline since December 2023. For investors in Turkey,the takeaway is that the regime of bonds functioning once again as a hedging tool is solidifying, which is a positive portfolio development; however, the exact same mechanism implies a downward revision of growth expectations on the equity side, meaning the two markets will continue to interpret the same news in opposing directions.

Levels to Watch

• Texas and Georgia Governorships: According to Strickland, the two states account for roughly one-third of all AI data center spending, and both flipped to Democrats. Local permitting and moratorium decisions will take effect faster than federal legislation.
• Bitcoin ($75,700 / $77,000): The overnight low and recovered level. Holding above $77,000 indicates the initial shock has been absorbed; below that, $75,700 forms the new short-term floor.
• Gold ($4,000): According to Simpson, this is the clear resistance; a breakout in either direction from this band will determine gold’s next serious move. A weaker dollar and falling real yields are providing support for now.
• U.S. 10-Year Yield (4.90%): The two-year sits at a two-month low. Today’s Treasury borrowing announcement will clarify long-term issuance volume; the market expects lower issuance.
• U.S. Employment Data (Friday): The first major macro catalyst after the election noise subsides. The probability of a Fed hike in December stands at 78%.
• USD/TRY (50.00): The exchange rate breached this level for the first time, with its RSI remaining at an extreme overbought reading of 98.5.

Weekly Calendar

Date	Day	Event
Nov 4	Wednesday	Eurozone October inflation; U.S. October ISM survey & September trade balance; Sweden Central Bank rate decision; U.S. Treasury quarterly borrowing plan; ECB Chief Economist Philip Lane speaks; U.S. EIA weekly inventory data
Nov 5	Thursday	Bank of England interest rate decision (expected hike from 3.75% to 4.00%); Norges Bank (expected unchanged)
Nov 6	Friday	U.S. October employment report (expected 65k increase, 4.2% unemployment)
Nov 11	Wednesday	MSCI announces index deletions (Strategy and Metaplanet at risk)
Mid-Nov	—	Anthropic IPO pricing expected
Jan 2027	—	Democratic majority takes office; analysts expect investigations targeting the Trump administration, the Iran war, tariffs, and immigration policy
December	—	Fed rate hike probability at 78%; Bank of Japan also expected to hike