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A Democratic sweep of the US Congress sent global stocks lower on Wednesday as investors reassessed President Donald Trump's economic agenda. Asian technology shares suffered heavy losses, while the US dollar weakened and Treasury bonds gained. Meanwhile, Bitcoin fell below USD 76,000 as political uncertainty added pressure to already fragile financial markets.
The election results raised expectations of stronger congressional oversight of artificial intelligence, government spending, and financial regulation. Although Trump retains presidential veto powers, Democratic control of Congress could complicate his legislative priorities.
Asian technology stocks led the market decline as investors questioned whether greater political scrutiny could slow artificial intelligence investment. South Korea's Kospi dropped as much as 4%, while Samsung Electronics and SK Hynix each lost more than 5%. Japan's Nikkei 225 fell nearly 5%, and Taiwan's benchmark declined 3.4%.
Meanwhile, Nasdaq 100 futures pointed to further weakness in US technology shares. Nvidia also declined in overnight trading, extending pressure across the semiconductor industry. Anna Wu, founder of Floodlines Research, warned that Democratic oversight could affect data-center construction, electricity consumption and local project approvals.
The political shift comes as investors already question the cost and potential returns of large-scale AI infrastructure projects.
Chris Weston, Pepperstone's head of research, said the scale of the Democratic victory had prompted investors to reconsider their exposure to risk.
Yet renewable energy companies moved in the opposite direction. Enphase Energy and SolarEdge gained as much as 12%, while First Solar rose 11% and Sunrun advanced 8.7%.
Investors anticipated that Democratic lawmakers could challenge some of Trump's restrictions on clean-energy development.
Treasury bonds also rallied as markets assessed whether Democratic control could limit Trump's tax cuts and spending proposals. Consequently, five-year Treasury yields dropped nine basis points to 4.68%, while the benchmark 10-year yield declined seven basis points to 4.89%.
Lower yields reflected expectations of reduced fiscal stimulus and potentially slower government borrowing. The answer depends partly on how Democratic lawmakers approach technology regulation, federal spending and the administration's remaining legislative priorities.
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Cryptocurrencies joined the broader market decline as investors questioned the future of industry-backed legislation. Bitcoin dropped as much as 2.8% to below USD 76,000. Ether and Solana also weakened as traders reduced exposure to riskier assets.
The decline followed existing pressure from spot Bitcoin ETF outflows and the aftermath of the reported Binance security breach. Trump had previously supported lighter cryptocurrency regulation, a strategic Bitcoin reserve and efforts to expand America's digital asset industry.
Meanwhile, Brent crude traded near USD 103 per barrel as renewed diplomatic efforts between Washington and Tehran eased immediate supply concerns. The decline offered some relief to energy-importing economies, including India. Nevertheless, uncertainty surrounding the conflict continued to affect oil markets.
Copper also fell as much as 1.5% as investors reassessed demand from AI infrastructure and the outlook for Trump's proposed tariffs. The metal's retreat followed concerns about future spending on data centers and power grids, alongside uncertainty over US trade policy.
The Democratic congressional sweep triggered losses across technology stocks, cryptocurrencies and the US dollar while supporting Treasury bonds and renewable energy shares. Investors now face uncertainty over AI investment, fiscal policy and cryptocurrency regulation. Congressional oversight, geopolitical developments and future spending decisions remain important factors for global markets.