Daily Summary: Blue Wave in Congress Triggers Market Euphoria, Oil Plunges

🏛️ Politics and Geopolitics

• The midterm elections in the United States ended with the Democratic Party taking full control of both houses of Congress.
• Investors welcomed the return of political gridlock with relief, which historically limits radical fiscal changes and tightens government spending frameworks.
• The Democratic leader in the House of Representatives announced the swift introduction of legislation aimed at curbing tariffs pushed by the White House and ending direct military involvement in the conflict with Iran.
• President Donald Trump acknowledged the Republicans' defeat, commenting on Truth Social about new stock market highs and expressing a desire for pragmatic cooperation with the opposition if they show readiness for compromise.
• The political earthquake in Washington triggered internal soul-searching in the Republican camp, where Speaker Mike Johnson announced he would not seek party leadership.
• Vice President JD Vance openly pointed to the costs associated with the war in the Middle East and the alliance with Israel as the primary reasons for the electoral defeat, while presidential advisors consider the resignation of the Secretary of Defense.
• At the same time, the US Department of the Treasury imposed further sanctions on entities in Turkey and India supporting Iran's shadow fleet and aviation sector, extending states of emergency regarding Tehran and Beijing.
• In the context of international relations, the Kremlin signaled readiness for tripartite talks on security guarantees following a meeting involving Melania Trump, hoping for continued peace efforts.

📊 Macroeconomics and Central Banks

• The ADP report brought a positive surprise in the US labor market, showing private sector employment growth at 86k compared to the forecasted 67k. These data point to continued resilience in the US labor market ahead of key government figures. At the same time, the ISM services index rose to 54.5 pts, representing the slowest pace of sector expansion in three months, while the prices paid sub-index held at an elevated level of 73 pts, signaling persistent cost pressures.
• The US Department of the Treasury published its Quarterly Refunding Announcement (QRA), setting debt supply at $125bn, in line with earlier market estimates. Under the plan, sales were announced for 10-year bonds worth $42bn and 30-year paper worth $25bn. The US trade deficit for September settled at -$105bn, while the trade deficit with China increased to $21.87bn.
• In the eurozone, the preliminary reading for October headline CPI inflation came in at 4% year-on-year, while the core index landed at 2.5%. Statements from European Central Bank representatives highlight rising inflation risks stemming from great power competition and a potential productivity boost generated by artificial intelligence. The composite Eurozone PMI reached 51.7 pts, with stronger readings from Germany offsetting weaker data coming from the French economy.

📈 Equity Markets

• Wall Street reacted with euphoric gains to the congressional election results, pushing the Dow Jones index up over 1,000 points and driving the S&P 500 through previous resistance levels. Equity markets welcomed the prospect of blocked new tariffs and a more balanced fiscal policy, triggering a massive capital flow back into discounted tech stocks.
• On the flip side, Tesla, SpaceX, and other AI-related companies saw heavy losses as they potentially face stricter regulations from a Democratic Congress.
• European indices, including Germany's DAX and Spain's IBEX, also headed higher, drawing support from falling government bond yields.
• Super Micro Computer posted a massive gain following impressive financial results showing company revenues nearly quadrupling year-on-year. Surge in demand for AI-dedicated server infrastructure reinforced the firm's position, setting aside recent investor concerns.
• Meanwhile, shares of Datadog suffered a sharp sell-off despite a seemingly solid quarterly report, which analysts attribute to elevated valuation expectations and more cautious forecasts for monetizing new cloud services.
• McDonald's beat analyst expectations in the third quarter, generating adjusted earnings per share of $3.57 alongside a global comparable sales growth of 1.5%. Concurrently, Kraft Heinz announced a strategic decision to spin off its North American coffee segment as part of a restructuring and portfolio optimization plan.
• Uber reported quarterly results aligned with market targets, posting revenues of $14.77bn and announcing plans to have 700 fully autonomous vehicles in its fleet by the end of the year and over 2,000 units by 2027.
• Pandora gained 7% following a presentation of strong jewelry sales growth, while Danish pharma giant Novo Nordisk stemmed its stock decline, though investors still await a clear bullish catalyst. In the US, CVS Health announced its intention to split its $117bn business into pharmacy and insurance segments.
• Meta Platforms attracted record demand reaching €53bn for its debt debut on the European market and acquired AI startup Conductor. OpenAI announced plans to acquire Pierre Computer Company, and Qualcomm entered into a strategic partnership with SpaceX's Starlink project.
• As of 7:34 PM CET, the S&P 500 stands at 7,736, gaining 1.67% on the day and 1.6% for the week; the Nasdaq 100 stands at 28,701, gaining 1.01% on the day and 0.55% for the week; the Dow stands at 53,428, gaining 3.13% on the day and 2.89% for the week; Tesla shares stand at 389.11, dropping 2.29% on the day and 2.66% for the week; Microsoft stands at 555.16, gaining 6.63% on the day and 6.36% for the week; Meta stands at 634.12, gaining 2.13% on the day and 3.15% for the week; and Google stands at 291.17, gaining 4.03% on the day and 3.99% for the week.

🛢️ Commodities and Agricultural Goods

• Crude oil prices posted their sharpest sell-off since April, dropping nearly -9% during a single session.
• The price crash was triggered by prospects of de-escalation in the Middle East following statements from the new congressional majority in Washington, which drastically reduced the geopolitical risk premium.
• The EIA government report showed a drop in US crude inventories by 0.865m barrels against an expected draw of 1.7m, though these figures took a back seat to political expectations of a diplomatic agreement with Iran.
• Wheat prices fell to their lowest levels since early July in response to Russia resuming exports, prompting investment funds to revise their market positions.
• Gold continues its impressive rally driven by falling bond yields and a weaker US currency, breaking past the psychological threshold of $4,000 per ounce.
• As of 7:34 PM CET, gold stands at 4,065, gaining 3.45% on the day and 4.93% for the week; WTI crude stands at 88.47, losing 8.56% on the day and 14.06% for the week; Brent crude stands at 95.24, losing 8.72% on the day and 16.0% for the week; wheat stands at 603.14, gaining 0.5% on the day and losing 0.29% for the week; while corn stands at 446.12, gaining 0.91% on the day and losing 0.44% for the week.

💱 Foreign Exchange and Debt Markets

• The US dollar came under heavy selling pressure, posting its deepest single-day decline since September against a broad basket of currencies.
• Yields on 10-year US Treasuries pulled back toward 4.93%, reflecting market confidence that the budget deficit will slow under a divided government.
• Dollar weakness translated into strength for emerging market currencies. Among major currencies, the New Zealand dollar saw the strongest appreciation, while the euro and Swiss franc gained about 0.4% each.
• As of 7:34 PM CET, the dollar index stands at 101.41, down 0.32% on the day and 0.4% for the week.

🪙 Cryptocurrencies

• Digital asset prices rebounded sharply, pushing Bitcoin firmly back above the $80,000 mark, recovering losses caused by recent exchange security incidents.
• Positive sentiment was bolstered by reports from the US SEC, where officials recognized the Canton Coin project as a digital commodity, ruling out regulatory sanctions surrounding its issuance. However, the crypto Fear & Greed Index remained at 34 pts, pointing to ongoing moderate fear among retail investors.
• As of 7:34 PM CET, Bitcoin stands at 80,404, gaining 3.5% on the day and 3.59% for the week.