A historic Democratic sweep in the US midterm elections triggered initial stock market tremors across Asia and Wall Street tech shares. However, Bitcoin quickly reversed early losses, bouncing from $75,700 back toward $78,000 despite ongoing ETF outflows.
Stock Markets React as Election Results Roll In
The results arrived during Asian trading hours on November 4. AI-related shares fell across the region, Treasury yields dipped, and the dollar weakened. US stock futures dropped sharply before paring losses.
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Japan’s Nikkei index fell 2,543 points to 60,538.67, breaking below its 200-day moving average. A stronger yen weighed on exporters and semiconductor stocks, while Nintendo and Fast Retailing bucked the decline.
On Election Day, November 3, Wall Street ended a losing streak on a chip rally. The S&P 500 rose 0.36% to 7,568.92, and the Nasdaq Composite gained 0.83% to 25,372.01. The Dow fell 0.38% to 51,786.72 after Apple warned that higher memory costs could squeeze margins.
The Philadelphia Semiconductor Index jumped 2.63%. Nvidia rose 2.29%, lifting its market value back above $5 trillion, and AMD climbed 3.65%. After the close, AMD reported 45% year-over-year growth in third-quarter revenue and forecast fourth-quarter revenue of about $17 billion, versus analyst expectations of $16.2 billion.
Bitcoin Briefly Drops and Rebounds
Bitcoin price briefly hit a seven-week low near $75,700 before recovering toward $78,000 on November 4. The rebound followed a broader reassessment of the political implications of Democrats taking control of Congress after US voters delivered a strong rebuke to Donald Trump’s policies.
Ethereum gained around 2.6% to $2,319, and Solana climbed 1.6% to $93.70.
However, institutional demand remained a concern. US spot Bitcoin ETFs recorded $115.56 million in net outflows on November 3, marking their third consecutive day of withdrawals, according to SoSoValue data.
Analysts Expect Volatility, Not a Policy Overhaul
The historic Democratic victory followed growing voter discontent over Trump’s unilateral decisions, tariffs, and rising oil prices driven by the war in Iran. Analysts expect short-term volatility as investors assess gridlock, tighter regulation, and reduced fiscal stimulus.
Tech and AI stocks could face pressure from scrutiny of Big Tech and data-centre spending, and crypto may face regulatory uncertainty.
However, analysts caution against overreacting to the election outcome. Trump keeps his veto power and significant influence over trade, tariffs and foreign policy, limiting the scope for major policy changes. Lower Treasury yields could also provide support for equities, potentially easing the initial sell-off.
Overall, analysts expect volatility rather than a fundamental shift in the market outlook, with corporate earnings, economic growth, and interest rates likely to remain the key drivers of the stock market.
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