US markets rallied after Democrats’ sweeping victory in the midterm elections, as investors became hopeful that the result could push US President Donald Trump towards ending the ongoing war with Iran. The election outcome also raised hopes of lower energy prices and reduced geopolitical tensions.
Brent crude has fallen around 20% so far this week. It is now heading towards its biggest weekly decline since April 2020, according to Reuters.
Investors were not entirely surprised by the Democratic victory, although the scale of the win was bigger than expected. US government bond prices also increased, pushing bond yields lower. The yield on the benchmark 10-year US Treasury note fell by 2 basis points to 4.87%.
Deutsche Bank strategist Jim Reid said the election result was broadly in line with investor expectations, but Democrats performed better than anticipated.
Oil prices remained under pressure as traders expected Trump to avoid escalating the war with Iran. Investors believe that a Democratic-controlled Congress , combined with growing political pressure over high energy prices, could make the US president less willing to continue the conflict. Vice President JD Vance also directly blamed the war for the Republican losses.
In a post on X, Vance wrote: “The reason we lost is the war.”
