Stocks and Dollar Slip as Democrats Sweep Congress
Wednesday, 4 November 2026 — Democrats won control of both chambers of Congress, and US stock futures and the dollar fell while Treasuries rose, as investors bet that a divided government will slow President Donald Trump's agenda (BBG). In the midterm elections, Democrats flipped at least six Senate seats and are on course for 53 Senate seats and 255 House seats, according to NBC projections (BBG). Iran and the US are reviewing fresh proposals from mediators after limited US strikes, and New Zealand's jobless rate rose to an 11-year high (BBG).
Chart of the day: New Zealand's labour market weakens
New Zealand: the unemployment rate, employment growth, the participation rate and private-sector wage growth since 2019, with the RBNZ's projections dashed. In our view, the report should reduce the pressure on the RBNZ to raise rates. Source: Stats NZ, RBNZ, Macrobond, GGMA.
Our three themes for the day:
Democrats won both chambers of Congress, and markets read the result as a brake on President Donald Trump's agenda: US stock futures and the dollar fell, while Treasuries rose. Investors expect a divided government to find deficit-expanding legislation harder to pass, and the ten-year yield fell 3 basis points to 4.93%. Technology led the losses after Texas's governor-elect called for a moratorium on new data centres, but futures pared their declines as some investors bought the dip.
New Zealand's unemployment rate rose to 5.7% in the third quarter, the highest since 2015, against the 5.5% economists expected, and employment fell 0.1%. In our view, the report should reduce the pressure on the Reserve Bank of New Zealand to raise rates. Money markets price in a 60% probability of a December hike.
Iran and the US are reviewing fresh proposals from mediators after limited US strikes overnight, and Qatar expects feedback from both sides within two days. Brent rose 0.7% to $104.31 a barrel, and the American Petroleum Institute is said to have reported that US crude inventories fell 5.3 million barrels last week.
In brief
Democrats won both chambers of Congress, sending US stock futures and the dollar lower and Treasuries higher.
Technology led the losses after Texas's governor-elect called for a moratorium on new data centres.
New Zealand's jobless rate rose more than expected. In our view, that eases the pressure on the RBNZ to hike.
Oil edged higher as Iran and the US reviewed fresh mediator proposals after limited US strikes.
Gold rallied as the dollar and Treasury yields fell.
Today's Macro Roadmap: Sweden's Riksbank decides at 09:30 CET, and euro-area flash inflation is due at 11:00 CET. In the US, ADP payrolls follow at 14:15 CET, the Treasury's refunding statement is due at 14:30 CET, and the ISM services index is due at 16:00 CET.
The full briefing
Stocks
S&P 500 futures fell 0.2%, and Nasdaq 100 futures fell 0.4%, paring earlier losses as some investors bought the dip (BBG). Nasdaq 100 futures had dropped as much as 2.4% overnight on expectations of tighter scrutiny of the technology sector (BBG). Texas's Democratic governor-elect has called for an immediate moratorium on data-centre development, and half of the planned US AI data-centre additions could face stricter local scrutiny (BBG). One broker estimated that her win could put 13.3 gigawatts of projects at risk (WSJ). Tesla and SpaceX fell about 1.8% in after-hours trading (BBG). Solar stocks rallied, with Hanwha Solutions up as much as 10% (BBG). AMD reported third-quarter sales of $13.4 billion, above the $13.1 billion analysts expected, as data-centre chip sales nearly doubled to $8.5 billion (WSJ). Super Micro forecast quarterly revenue of $19.5 billion to $21.5 billion, against estimates of $16.5 billion (BBG). BMW cut its carmaking margin outlook for the second time in five months, to between minus 0.5% and 0.5% (BBG).
Asian equities
Stocks sold off first and then recovered part of their losses. South Korea's Kospi surged as much as 3.2% after the open, fell as much as 4% and then erased its declines (BBG). Hong Kong's Hang Seng rose 1.4%.
New Zealand
The unemployment rate rose to 5.7% in the third quarter from 5.6%, the highest since 2015, against the 5.5% economists expected, and employment fell 0.1% (BBG). In our view, the report should reduce the pressure on the Reserve Bank of New Zealand to raise rates. Money markets price in a 60% probability of an RBNZ rate rise in December.
The central banks
Bundesbank President Joachim Nagel said a December ECB rate increase is, from today's perspective, very likely to be necessary because the inflation outlook has worsened (Bundesbank) (BBG). Governing Council member Martin Kocher said another increase this year is likely if conditions stay unchanged, but that the ECB cannot precommit (Econostream-media). Bulgaria's Dimitar Radev said the October pause was not a conclusion that tightening is over (Bulgarian National Bank). Slovenia's Primož Dolenc said further ECB action may be warranted in December if the inflation outlook does not improve (Bta.bg). The Netherlands' Olaf Sleijpen said elevated energy prices pose a clear upward risk of second-round effects (Briefs.co). Bank of Canada Governor Tiff Macklem told lawmakers there could be a need to raise rates further, but that the bank will proceed carefully (BoC) (BBG). RBA Governor Michele Bullock said she did not know how high rates would need to go (RBA).
What's priced for central banks?
Currently, short-term interest rate (STIR) traders price in a 77% probability of a Fed rate rise in December and 19 basis points of tightening by then. For the ECB, they price in an 88% probability of a rate rise in December, and for the BoJ a 79% probability. They fully price in a BoE rate rise on Thursday, and price in a 52% probability of a BoC rate rise in December, a 19% probability of a further RBA rise and a 12% probability of an SNB rise.
Currencies
The dollar weakened against all of its Group-of-10 peers (BBG) (WSJ), and the dollar index fell 0.3% to 101.54. The Swiss franc gained 0.4% to 0.8176 per dollar, the yen firmed 0.3% to 158.14 per dollar and the euro rose 0.3% to 1.1226 dollars. The Swedish krona firmed 0.4% to 9.7582 per dollar before the Riksbank decision. The Australian dollar rose 0.3% to 0.699 dollars after holding near a two-week low following Tuesday's RBA hike (Investing), and the Canadian dollar rose 0.3% to 1.3973 per dollar after pulling back from a six-week high on Tuesday (Reuters).
Bonds
Treasuries rose as investors bet that gridlock will curb deficit-expanding legislation and further Treasury issuance (BBG). The ten-year yield fell 3 basis points to 4.93%, and the two-year yield fell 4 basis points to 4.60%. Traders added to long positions and pared bearish bets ahead of the Treasury's refunding statement today (BBG).
Commodities
Brent rose 0.7% to $104.31 a barrel, and WTI rose 0.6% to $96.62. Tehran and Washington are reviewing fresh proposals from mediators, and Qatar expects feedback from both sides within two days, according to a diplomat (BBG). Trump called the overnight US strikes on Iran "just a minor attack" and said the US had no immediate plans to attack Iran (BBG). He had said the US was ready, "locked and loaded", but that there may be no reason for strikes (Yahoo). A senior Iranian official said the two sides are still far from a deal (Reuters), days after Iran's supreme leader gave the government more authority to negotiate (BBG). Some US officials see Israeli intelligence on Iranian chemical weapons as an attempt to draw the US back into combat (Nytimes). In the oil market, the American Petroleum Institute is said to have reported that US crude inventories fell 5.3 million barrels last week, while gasoline stocks rose 1.4 million barrels (BBG). US shale drillers are cutting output as unusually warm weather reduces demand (BBG). Canadian heavy crude traded at its widest discount to US oil since 2018 (BBG), and Venezuela's acting president said oil production rose 8.5% over the past year (Reuters). Gold rose 2.3% to $4,021 an ounce as the dollar and Treasury yields fell (WSJ), and copper held near $14,000 a ton after touching its lowest since August (BBG). Chicago corn fell to a four-month low (BBG).
Crypto
Bitcoin rose 0.2% to $77,957 after touching a seven-week low on concern that a Democratic Congress could stall industry-backed legislation (BBG).
US politics
Trump said he was "absolutely willing" to accept the results and was prepared to work with Democrats (Nytimes). With the Senate from January, Democrats can block Trump's nominations, including for the Federal Reserve (BBG) (WSJ).
Data and the day ahead
Data and the day ahead: Yesterday, US job openings rose by 333,000 to 7.523 million in September, against the 7.100 million economists expected (Reuters) (Investing). Swiss inflation rose to 1.5% in October from 1.0%, above the 1.2% consensus. Overnight, Australian household spending rose 0.6% in September, above the 0.2% economists expected, led by transport and health (BBG). China's RatingDog services PMI slowed to 50.8 from 51.6, below the 51.7 consensus.
Still to come: Sweden's Riksbank is expected to raise its policy rate to 2.00% from 1.75% at 09:30 CET, and Governor Erik Thedéen holds a press conference at 11:00 CET. Euro-area flash inflation is due at 11:00 CET, with consensus at 4.0% from 3.8% and core at 2.5%. In the US, the ADP employment change is due at 14:15 CET, with consensus at 67k from 90k, followed by the trade balance and the Treasury's quarterly refunding statement at 14:30 CET. The ISM services index is due at 16:00 CET, with consensus at 54.8 from 54.9. ECB Chief Economist Philip Lane speaks in Berlin at 14:20 CET, and ECB Governing Council member Emmanuel Moulin speaks in Paris at 19:45 CET. Brazil's central bank announces its Selic rate decision at 22:30 CET (our preview here).
Time Stamp: 4 November 2026, 08:16 CET
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Related: Our preview: Riksbank, Euro-Area Inflation, ISM and ADP · Yesterday's Briefing: Asian Chip Stocks Slide as RBA Hikes and Signals a Pause · Previously on the RBNZ: RBA Decision, Swiss CPI, JOLTS, NZ Jobs & Midterms (2 Nov)