Energy markets reacted strongly to the US election results, as investors judged a Democratic-controlled Congress could constrain the administration and increase the chances of de-escalation in the US-Iran conflict. Brent closed the session nearly 9% down, below $95/bbl, while the TTF fell 4%.
US Treasuries rallied on expectations of lower inflationary pressures, lower government borrowing and potentially softer growth. The 10-year Treasury yield fell to around 4.9%, while AI and data-centre-related high-yield credit came under pressure on expectations of tighter regulation. European sovereign yields fell sharply and peripheral spreads contracted.
US equities rallied as the election result removed political uncertainty and boosted risk appetite, although AI infrastructure and energy stocks underperformed. The S&P 500 gained 1.6%, the Nasdaq 1.4%, while the US dollar weakened slightly. European equities also saw strong gains, driven in particular by the banking sector, as lower energy prices and reduced geopolitical risks led markets to reassess the economic outlook.
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