The Overnight Report: Post-Election Rally

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US markets rallied sharply higher, led by the Dow Jones which traded over 3% higher, its best day in over 15-months, as investors cheered the outcome of the mid-term elections.

After the Australian market recovered from its intra-day lows, ASX200 futures are pointing sharply higher, likely to be boosted by lower bond yields, lower oil prices and a higher gold price overnight.

World Overnight
SPI Overnight	9037.00	+ 181.00	2.04%
S&P ASX 200	8834.50	– 52.30	– 0.59%
S&P500	7688.62	+ 119.70	1.58%
Nasdaq Comp	25736.51	+ 364.50	1.44%
DJIA	53356.12	+ 1569.40	3.03%
S&P500 VIX	16.86	– 3.97	– 19.06%
US 10-year yield	4.89	– 0.06	– 1.17%
USD Index	101.51	– 0.35	– 0.35%
FTSE100	10829.21	+ 190.78	1.79%
DAX30	26437.67	+ 573.05	2.22%

Good Morning,

The Australian market lifted off its intra-day lows yesterday, as the US mid-term election results started to roll in and the world at large realised control over US Congress is about to change and likely to keep the Trump administration (more) in check.

As also highlighted in commentary further below, a Democrat-controlled Congress will lead to legislative gridlock on major domestic issues ahead of the 2028 presidential election. Markets like the prospect of limited opportunities to upset the applecart, so to speak.

US futures reversed into positive from negative territory towards the close of the domestic market.

The ASX200 closed down -0.59% or -52.3% to 8834.50 with utilities up over 1% and industrials, materials and real estate all off by over -1%.

After the close, media reports suggested JPMorgan was seeking to pick up to 9.9% of beaten down NextDC ((NXT)) shares at up to $9.50, acting on behalf of US data centre behemoth, Digital Realty (US$70bn market cap) and Goodman Group ((GMG)).

Morgans on CSL ((CSL)):

“CSL has staged a remarkable recovery from its June lows, reflecting renewed investor confidence in the earnings outlook and the potential for operational improvement.

“While we remain constructive on the underlying franchises and longer-term earnings potential, the recovery has been driven principally by a restoration of confidence rather than a material improvement in near-term earnings expectations.

“With better-balanced near-term risk/reward and execution risks remaining, we believe further upside will increasingly require evidence of sustainable earnings growth, rather than simply re-rating. Move to HOLD.”

National Australia Bank ((NAB)) released its FY26 financial report today, showing cash earnings went backwards by -13.4%, statutory net profit for the year is $6.143bn, the final dividend of 85c means total payout remains unchanged at 170c and the bank’s CET1 ratio sits at 11.87%.

For more details and to stay in touch with which companies are reporting, AGMs and going ex-dividend, check out the FNArena Calendar https://fnarena.com/index.php/financial-news/calendar/

Market Overview, J.L. Bernstein extract

The Dow Had Its Best Day Since April 2025

The rally that started when President Trump said he’d accept the results held all day.

The Dow closed back above 53,000 for the first time since Sept. 8, and Wall Street’s fear gauge, the VIX, fell below 17.

Dow Jones Market Data says stocks have finished higher a year after every midterm since 1942.

Voters Turned on Data Centers, and the Tech Giants Won

Voters sided against data centers in 40 of 41 local ballot measures, by CNBC’s count.

Texas, home to more than a quarter of planned U.S. data center capacity, elected a governor who promised to halt new construction.

Companies that rent out AI chips, like CoreWeave $CRWV, fell along with the chipmakers.

Microsoft $MSFT hit a record anyway, since existing data centers are worth more when new ones get harder to build.

Oil Had Its Worst Day Since April

U.S. crude settled at US$88.12 as traders bet on peace talks, after Vice President JD Vance blamed the Iran war for Republican losses.

That’s -US$16 off in three sessions, and international crude closed under US$100 for the first time in over a month.

Gasoline futures were on track for their lowest close since March 10.

ANZ Bank, Australian Morning Focus, extract

Equities responded positively to the Democrats’ clean sweep of Congress in the midterms and ongoing declines in oil prices.

The S&P500 was up 1.58%. The EuroStoxx50 and the FTSE100 ended the session up 2% and 1.8%, respectively.

The yield on the US 10y Treasury bond was -5bp lower at 4.89%.

The active WTI oil future was down -8.6% at US$87.7/bbl, while spot gold was up at USD4,057/oz.

US ISM services index eased 0.4pts to 54.5 in October but remained firmly expansionary. Business activity and new orders softened, while employment improved.

While the prices index edged down to 73.0, it remains well above 50, signalling persistent inflation pressure.

Separately, the US trade deficit remained elevated at USD105bn in September, little changed from August. Exports rose 1.9%, outpacing a 1.2% increase in imports. However, the deficit has narrowed considerably, year-to-date, running -12.2% below the corresponding period in 2025.

Euro area’s headline inflation rose to 4.0% y/y in October from 3.8% y/y in September. The rise was due to a 20.8% y/y rise in energy costs.

Elsewhere, evidence of broadening inflation pressures is scant. That is encouraging, but we expect the ECB will focus on the headline figure, and we continue to look for a 25bp rate rise in December.

US midterm elections: Markets responded positively to the Democrats’ victory in the midterm elections, which will see them take control of the Senate and House of Representatives when the new Congress convenes in January.

Additional declines in oil prices also helped sentiment.

Our assessment is that a Democrat-controlled Congress will lead to legislative gridlock on major domestic issues ahead of the 2028 presidential election. That, however, is unlikely to upset the economy’s growth momentum.

Possible legislation to curtail the rapid buildout of AI is likely to be vetoed by President Trump; the debt ceiling will likely be increased without any meaningful drive to reduce the budget deficit; and slow growth in the supply of labour will keep unemployment low, helping to support consumption.

Facing a difficult domestic political landscape, Trump may focus the remainder of his tenure on issues he can affect. These include foreign and trade policy.

The economy has weathered volatility arising from these areas well in recent years.

As momentum in domestic demand remains solid, the US economy should continue to prove resilient.

Gridlock Expected After Blue Wave, MFS Markets Insights Team, extract

Following the 2026 US midterm elections, investors are focusing on the potential impacts of the shift in congressional control from Republicans to Democrats.

Though Democrats swept both the House and the Senate, they do not have a veto-proof majority, which suggests legislative gridlock is probable.

Without Republican congressional majorities, President Trump may therefore lean more heavily on executive authority in the final two years of his term.

As a result, many aspects of current policy could remain in place, as a divided government reduces the likelihood of major legislative changes, which could limit fiscal expansion and significant regulatory initiatives.

Markets typically look through political uncertainty

While election-related market volatility is not unusual, history suggests investors should take a longer-term view.

Political events often create short-term market swings, but long-term returns have generally been driven by earnings growth, economic fundamentals, and monetary policy.

Markets have frequently performed well under a divided government and have historically delivered strong returns following midterm election years.

Since World War II, US markets have been higher 12 months after election day in all 20 midterm elections since 1946, with an average gain of 14.4%.

Sector implications under a Democrat-led Congress

• At the margin, clean energy will likely face fewer headwinds.
• In healthcare, hospitals and healthcare providers could benefit from the reduced probability of cuts to Medicaid.
• The defence sector could face new headwinds, as Democrats might shift the Trump administration’s priorities.
• The energy industry could face stricter congressional oversight.
• The drive to reshore US manufacturing enjoys bipartisan support, so industrials, semiconductors, and electrical equipment manufacturers likely will not face increased congressional roadblocks.
• AI privacy is a Democratic priority, as is the community impact of data centres. Expect modest headwinds for the industry.
• Data centre construction may face additional headwinds at the state level, given Democratic wins in key gubernatorial races.

Potential flashpoints

Despite expected gridlock, unless Republican lawmakers pass another reconciliation bill before the current Congress ends, there will be no avoiding must-pass legislation over the next two years, which could raise the political stakes.

Contentious issues include government appropriations, raising the debt ceiling, dealing with the looming Social Security deficit and, perhaps most contentiously, funding for the war in Iran.

The regulation of AI will likely also be hotly debated in a Democrat-controlled Congress and could be a sticking point, given the Trump administration’s relatively light-touch regulatory regime.

Post Midterms, Tim Murray, T.Rowe Price, extract

The 2026 midterms may have greater political than market implications, as the government moves from full Republican control to divided government.

Markets have largely anticipated this outcome for much of 2026, suggesting the immediate impact could be muted.

A more constrained presidency could provide some support for the US dollar by reducing policy uncertainty. However, much of this adjustment may already be reflected in markets.

For Treasuries, divided government does not necessarily mean greater fiscal discipline. Much of the fiscal stimulus from the One Big Beautiful Bill Act is already in place, while persistent deficits and continued issuance could keep upward pressure on yields.

Meanwhile, AI-related investment is increasing demand for capital as hyperscalers and other companies turn increasingly to borrowing to finance expansion.

Divided government could also mean less pressure on the Federal Reserve, reducing the risk of an excessively dovish policy stance.

Equities may see less of the traditional post-midterm boost, given that much of the political uncertainty has already been priced in. More meaningful implications could emerge at the sector level.

AI and data centres may face greater bipartisan scrutiny, potentially weighing on sentiment and delaying some projects, even without significant new legislation.

Financials, meanwhile, could see their deregulation tailwind fade as divided government creates friction around further policy changes.

For housing and construction, the market remains effectively frozen by the mismatch between prevailing mortgage rates and the lower rates held by existing homeowners, a problem that legislation alone may struggle to resolve.

Ultimately, the midterms may do little to alter the forces already shaping markets.

For investors, persistent fiscal pressures, growing competition for capital, and sector-specific policy developments could matter more than the election result itself.

US Midterms – Implications for Trump’s final two years, Oxford Economics, extract

Democrats swept both chambers of Congress with larger-than-anticipated margins.

In addition to surpassing the 218 seats needed to win control of the House, Democrats will have at least a 54-seat majority in the Senate, flipping seven Republican-held seats so far.

We’re not changing our baseline forecasts, though the risks to them in both directions loom larger. A potential government shutdown in mid-December and/or a rapid reconciliation bill focused on defense during the lame-duck session are near-term risks to watch.

The result adds upside risk of a deficit-financed grand bargain that boosts defense and welfare spending, though we think that’s more of an issue for 2028 than 2027.

That scenario would add 0.3ppts to growth in 2028. Our baseline assumes both parties agree to extend a range of personal tax cuts, but intractable gridlock is a downside risk that could cut growth by -0.2ppts in 2029 and -0.1ppt in 2030.

The downside risk is that the administration goes harder on tariff, foreign, and immigration policies. With the midterms over, escalation with Iran appears more likely.

The 50% auto tariff on Canada and the expiring US-China truce are flashpoints to watch in January. Net immigration is still slowing amid a ramp-up of funding for immigration and customs enforcement.

Federal regulation is unlikely to derail the AI infrastructure buildout over the next two years. The bigger risk lies with states and localities – especially tighter data center rules across the South and Midwest.

Midterms can be a misleading guide to the next presidential election. Based on our baseline forecast for 2028, strong economic data will be more supportive of the Republican presidential nominee than it is today.

US Equity Strategy Quick Take, Lori Calvasina, RBC Capital extract

1.We came into election night thinking a Democratic sweep would be a neutral to negative signal for the US equity market, and that’s generally how the overnight price action played out.

2. It will take some time to sort out what issues the new Congress might choose to pursue, which could ultimately reverberate in sectors. We observed in the lead up to the election that affordability is an issue with many tentacles based on our review of campaign YouTube videos in close races in the Senate, House, and Governors’ races.

While Health Care isn’t off the table as a potential priority, we were struck that it didn’t rank high on the list of the most important issue facing the country even though it was one of the most discussed issues in close races.

Some of the questions on data centers suggested concerns about regulation should be faded, but others suggested they should remain in the spotlight.

Regardless of what does or does not happen with Congress on this issue, risk does remain from the Governors’ results as AI/data centers was a top issue in the close campaigns for those seats.

3.The overnight price action suggested to us that the election results are unlikely to halt the rotation in leadership in the US equity market that’s been underway recently from big cap Growth to small caps and non-TIMT related sectors.

As noted above, Russell2000 futures, one of the destinations in the rotation trade, outperformed Nasdaq100 futures and the S&P500 overnight.

4. We do see the decisive margins in both chambers as a positive for equity markets from the perspective of uncertainty being removed.

As discussed, the S&P500 gains in the years that follow midterms tend to be sub-trend (6.2% on average) in years that didn’t see a down 3Q or down 4Q in the midterm year itself.

Corporate news in Australia:

• RBC BlueBay in advanced negotiations to acquire Yarra Capital Management, potentially providing an exit for private equity owner TA Associates
• Arthur Laundy acquires another Sydney pub for $30m, expanding his portfolio of more than 90 hotels
• Goodman Group ((GMG)) and Digital Realty seek to acquire an additional 9.9% stake in NextDC ((NXT)) for approximately $715m at $9.50 per share
• Frasers Group’s 65cps takeover bid for Accent Group ((AX1)) faces shareholder and proxy adviser opposition ahead of its AGM
• Abu Dhabi’s XRG completes its US$1.45bn acquisition of Shell’s 16.67% North West Shelf stake, with Macquarie flagging a potential further 16.67% acquisition from Woodside Energy ((WDS))
• Auckland Airport ((AIA)) launches up to NZ$100m in five-year retail bonds and proposes a further NZ$150m wholesale tranche, with total issuance capped at NZ$350m
• David Jones reportedly heading towards administration this week after rescue negotiations with landlords break down
• Tom Wallace identified as the financial backer of bankrupt pub entrepreneur Jon Adgemis, having financed his struggling business and attempted to acquire outstanding debts

On the calendar today:

-AU RBA Deputy Governor Hauser speech

-AU Sep Trade balance

-JP BoJ September meeting minutes

-JP Oct Composite PMI (final)

-EZ Sep PPI

-UK BoE rate

-UK Oct Construction PMI

-US 24 Oct Continuing jobless claims

-AMPLITUDE ENERGY LIMITED ((AEL)) AGM

-ALKANE RESOURCES LIMITED ((ALK)) AGM

-AMCOR PLC ((AMC)) Q1 earnings report

-BANNERMAN ENERGY LIMITED ((BMN)) AGM

-BREVILLE GROUP LIMITED ((BRG)) AGM

-COG FINANCIAL SERVICES LIMITED ((COG)) AGM

-CEDAR WOODS PROPERTIES LIMITED ((CWP)) AGM

-FUTURE GENERATION GLOBAL LIMITED ((FGG)) ex-div 4.20c (100%)

-HIPAGES GROUP HOLDINGS LIMITED ((HPG)) AGM

-LIGHT & WONDER INC ((LNW)) Q1 earnings report

-NATIONAL AUSTRALIA BANK LIMITED ((NAB)) FY26 earnings report

-NOUMI LIMITED ((NOU)) AGM

-NEWS CORPORATION ((NWS)) AGM

-NEWS CORPORATION ((NWS)) Q1 earnings report

-REA GROUP LIMITED ((REA)) Q1 earnings report

-SOUTHERN CROSS MEDIA GROUP LIMITED ((SXL)) AGM

-WESTPAC BANKING CORPORATION ((WBC)) ex-div 77.00c (100%)

-WOODSIDE ENERGY GROUP LIMITED ((WDS)) investor briefing

-WHITEHAVEN COAL LIMITED ((WHC)) AGM

FNArena’s four-weekly calendar: https://fnarena.com/index.php/financial-news/calendar/

Spot Metals,Minerals & Energy Futures
Gold (oz)	4063.35	+ 142.58	3.64%
Silver (oz)	52.24	+ 2.58	5.20%
Copper (lb)	6.38	0.00	0.00%
Aluminium (lb)	1.40	– 0.01	– 0.42%
Nickel (lb)	6.89	– 0.03	– 0.42%
Zinc (lb)	1.76	– 0.03	– 1.68%
West Texas Crude	88.72	– 7.86	– 8.14%
Brent Crude	95.18	– 9.06	– 8.69%
Iron Ore (t)	91.95	+ 0.92	1.01%

The Australian share market over the past thirty days…

Index	04 Nov 2026	Week To Date	Month To Date (Nov)	Quarter To Date (Oct-Dec)	Year To Date (2026)
S&P ASX 200 (ex-div)	8834.50	-0.83%	-0.83%	0.51%	1.38%

BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS
4DX	4DMedical	Upgrade to Hold from Sell	Ord Minnett
AMP	AMP	Downgrade to Hold from Buy	Ord Minnett
BOE	Boss Energy	Upgrade to Trim from Sell	Morgans
COL	Coles Group	Downgrade to Hold from Buy	Ord Minnett
CSC	Capstone Copper	Upgrade to Buy from Hold	Ord Minnett
DYL	Deep Yellow	Downgrade to Speculative Buy from Buy	Ord Minnett
L1G	L1 Group	Upgrade to Buy from Hold	Bell Potter
LTR	Liontown	Upgrade to Buy from Hold	Ord Minnett
ORG	Origin Energy	Downgrade to Hold from Accumulate	Ord Minnett
RMD	ResMed	Downgrade to Accumulate from Buy	Morgans
		Downgrade to Accumulate from Buy	Ord Minnett
RMY	RMA Global	Downgrade to Speculative Hold from Speculative Buy	Bell Potter
TTX	Tetratherix	Upgrade to Lighten from Sell	Ord Minnett

For more detail go to FNArena’s Australian Broker Call Report, which is updated each morning, Mon-Fri.

All overnight and intraday prices, average prices, currency conversions and charts for stock indices, currencies, commodities, bonds, VIX and more available on the FNArena website. Click here. (Subscribers can access prices on the website.)

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