Nasdaq Futures Fall 1.9% and Asian Stocks Slide as Democrats Gain in US Midterms

Futures on the tech-heavy Nasdaq 100 were down 1.9 per cent, The National reported, citing Bloomberg data. S&P 500 futures fell 1.06 per cent, reversing an earlier gain of 0.5 per cent, and Dow Jones futures lost 0.7 per cent. The dollar weakened against its G10 peers. The yield on the benchmark 10-year US Treasury note fell seven basis points to 4.89 per cent.

A Shift in Washington

CNN and CBS projected that Democrats had won control of the House of Representatives, according to The National. The party needed to flip only three Republican-held seats, and early results showed it had easily done so. Democrats also flipped a Senate seat in North Carolina, won by Roy Cooper, and picked up the governorship of Georgia. As of 9.45pm Washington time, AP projections gave Democrats 45 Senate seats and Republicans 36, with 19 races still to be called. A Senate majority requires 51 seats.

Control of the House would let Democrats block President Donald Trump's legislative agenda and open investigations into his administration's policies during his last two years in office. According to The National, equity investors fear that Democratic control of Congress could bring tighter regulation and closer scrutiny of tech-heavy sectors, including AI. Bond investors, by contrast, expect political deadlock to hold down government spending and ease concerns about borrowing.

"Early headlines and prediction markets are suggesting a rising probability of a blue wave," Andrew Ticehurst, a senior rates strategist at Nomura Holdings, told Bloomberg. He said that outcome is generally seen as bad for the dollar and good for Treasuries. Charu Chanana, chief investment strategist at Saxo in Singapore, told Reuters that markets appeared to be pricing in "the possibility of a stronger-than-expected Democratic showing", which could reduce expectations of more fiscal stimulus.

Chip Markets Hit Hardest

The biggest falls came in Asia's chip-heavy markets. South Korea's Kospi dropped 3.6 per cent after an early gain of more than 3 per cent, and Japan's Nikkei fell 3.5 per cent. MSCI's broadest index of Asia-Pacific shares outside Japan lost 0.5 per cent. Hong Kong's Hang Seng slipped 0.22 per cent and the Shanghai Composite eased 0.21 per cent. Indian stocks were expected to open lower.

The turn came after a firmer session on Wall Street on Tuesday, when Nvidia and other large technology stocks lifted the market and offset a fall in Apple, AP reported. Investors were already uneasy about how the AI build-out is being paid for. Meta raised $15 billion in a five-part US bond sale to fund its AI expansion, according to Reuters, the latest in a series of large debt raises by technology groups.

Data Centres on the Ballot

The vote also bears directly on AI infrastructure. The Information reported that Texas, one of the fastest-growing data centre markets in the US, elected Democrats as governor and to the US Senate for the first time in decades. It said the result creates uncertainty for the state's data centre industry and for Elon Musk, its most prominent tech figure.

For investors in AI companies and the infrastructure behind them, the overnight moves add political risk to existing doubts about the returns on heavy AI spending. With many races still uncalled, the full balance of power in Washington, and what it means for tech regulation, may take days to become clear.