Shares advance after Wall Street rally following US midterm elections

US stocks rallied sharply after the midterm elections cost President Trump's party its control of Washington, while Asian shares were mixed and AI-linked stocks fell.

The Dow Jones Industrial Average jumped more than 3% on Wednesday, led by hospital owners and dollar stores serving low-income Americans. Analysts quoted in the article note that stock prices depend more on company profits and interest rates than on who controls Congress, and that investors generally prefer split control because it lowers the risk of sweeping economic change.

Not every company benefited. Trump Media & Technology Group fell 24.5%, and Tesla and SpaceX dropped 3.3% and 3.8%. Defence contractors such as Lockheed Martin fell 6.9% on fears that a Democratic-led Congress could push Trump to pull back from the war with Iran, and oil majors ExxonMobil and ConocoPhillips also declined.

In Asia, markets were less exposed to AI and mostly rose, with Hong Kong's Hang Seng up 2.8%. Chip-related shares sold off heavily, however: South Korea's Kospi was down 3.5% in late morning trading, Samsung Electronics fell 5.7%, and Tokyo Electron and Advantest dropped 7.7% and 9.4%. The Brent crude price was near $94 a barrel, its lowest level in about two months.

Key points

• Dow Jones Industrial Average rose more than 3% after the midterm elections on Wednesday.
• Republicans lost their sole control of Washington, which investors generally view as limiting major economic changes.
• Trump Media & Technology Group fell 24.5%, and Tesla and SpaceX also declined.
• Defence stocks dropped on the possibility of a Democratic Congress pressing Trump to pull back from the Iran war.
• AI-linked chip stocks sold off in Asia, with Samsung Electronics down 5.7% and Advantest down 9.4%.
• Brent crude traded near $94 a barrel, its lowest level in two months.

Why it matters

The rally and the AI sell-off show investors weighing political risk against concerns that AI-driven share prices have risen too high. Because Trump has been a major backer of the AI industry, the election result has added to those doubts.