Multiple global markets have pared losses triggered by a Democratic sweep of the US Congress, as investors weigh the possibility that President Trump's policies may face stricter scrutiny while also considering the constraints lawmakers will face in reshaping their agenda.

Asian tech stocks and the dollar initially came under pressure, while US Treasuries rose, as the prospect of political gridlock in Washington prompted investors to reconsider trades built around Trump's push for deregulation, tax cuts, and rapid AI expansion.

With Democrats in control, Congress could tighten oversight of data center construction and challenge parts of Trump's economic agenda. However, Trump holds veto power, which would limit Congress's ability to drive major policy changes, helping South Korean stocks recover lost ground.

Market reactions to the US midterm election results are as follows:

AI Trades

Investors in AI-related trades are assessing the risk of stricter scrutiny on the tech sector and delays in US data center construction. Candidates from both parties used data centers as a campaign issue, adding further pressure to a market already concerned about the scale of AI investment and returns. Japan's Nikkei 225 Index, which has a high weighting of tech stocks, led declines, falling nearly 5% at one point before narrowing its drop. South Korea's benchmark KOSPI Index erased a loss that had reached 4%, with Samsung Electronics and SK Hynix both declining about 1%. Taiwan's stock index also narrowed its loss to 0.8%. Tomo Kinoshita, Global Market Strategist at Invesco Asset Management, said Democrats are expected to control Congress, raising market concerns about stricter scrutiny of the AI industry and weighing on related Asian stocks. "However, this reaction seems somewhat overdone. Even if the next Congress passes legislation tightening AI regulation, Trump can still veto it."

Green Energy

Solar stocks surged as investors bet that a decisive Democratic victory could slow or even reverse some of Trump's measures targeting clean energy projects, potentially benefiting Asian solar, battery, and grid suppliers with US operations. South Korea's Hanwha Solutions rose as much as 22%, while HD Hyundai Energy Solutions Co. and OCI Holdings Co. each gained at least 12%. US solar stocks rose on the Blue Ocean alternative trading system. Enphase Energy Inc. and SolarEdge Technologies Inc. gained as much as 12%, while First Solar Inc. and Sunrun Inc. rose 11% and 8.7%, respectively.

Dollar and US Treasuries

The dollar fell against all G10 currencies. Markets are concerned that a Democratic sweep of Congress could weaken the "US exceptionalism narrative," especially if tighter scrutiny of AI investment drags on economic growth. The dollar spot index fell as much as 0.4%, the largest drop in a month. As investors sought safe-haven assets, the Swiss franc and Japanese yen strengthened. US Treasuries advanced, with yields falling across all maturities. Investors are betting that Democratic control of Congress could constrain Trump's tax and spending agenda, dampening the prospect of fiscal stimulus and additional borrowing. The 5-year Treasury yield fell as much as 9 basis points to 4.68%, while the 10-year yield dropped as much as 7 basis points to 4.89% before narrowing declines.

Cryptocurrencies

The US midterm election results cast doubt on the prospects for legislation supported by the cryptocurrency industry, with cryptocurrencies falling alongside other risk assets before gradually recovering. Trump has been openly supportive of the industry, promising to make the US the "crypto capital of the world," establish a strategic Bitcoin reserve, and reduce regulatory pressure, creating a more friendly environment for digital assets. As election results rolled in, Bitcoin fell as much as 2.8% to below $76,000, and Solana also declined. Prior to this, spot Bitcoin ETFs had experienced fund outflows, and last week's record hacking incident at Binance had already weighed on the cryptocurrency market.

LME Copper

Meanwhile, gold traders are assessing whether a strong Democratic victory will constrain Trump's fiscal agenda and curb market expectations for further government spending. Spot gold rose as much as 2.8%, returning above $4,000 per ounce.