From the Desk

This week, America went to the polls and sent a clear message it was worried about the cost of living and wanted change. The resulting midterm congressional shift was emphatic. The incumbent Republican party lost control of both chambers by a sizeable margin. 

The markets embraced the results. Some of this is reflex as uncertainty gets eliminated. But the resounding margin of victory could also restore a more balanced government, which markets tend to favor.

The immediate market reaction was that crude oil prices dropped, as the incoming congressional majority has made it clear it wants to end the war with Iran. The new Congress has also expressed that it wants to reinvigorate its oversight of tariff policy. This has been something the current government has seemingly allowed the executive branch to be transactional with. Key trading partners have been cautiously optimistic, and most international equity markets were up.

Within U.S. equities there were some shifts. Health care stocks were bolstered by the expectation that the new Congress would unwind coverage cuts. The same for clean energy stocks, as they saw an uptick on expected renewed interest in completing formally approved projects. On the other side, stocks of key defense contract companies were down.

A key voter issue was AI data centers. Campaign pledges for more oversight and moratoriums were a routine promise across numerous states. Expectations of a slower pace of buildout were evident in equity performance. Hyperscalers that already have significant installed data center capacity were up. Neocloud companies, that rely on an accelerated pace of datacenter buildout, were down.

The market’s assessment of the impact on hyperscalers is interesting. Markets might view the potential for a slower capex cycle as a welcome speed bump. This could allow more time for AI revenue to emerge, and in turn provide an earlier read on who the winners and losers could be.

Sources: Bloomberg, The Financial Times, 2026.