Stock Futures Edge Lower, Treasurys Strengthen After Democratic Sweep

By Joe StonorU.S. stock futures were slightly lower and Treasurys strengthened after the Democrats delivered a resounding win in the midterm elections.Equities fell sharply when initial results arrived, before paring losses as the scale of the Democratic victory became clear.Nasdaq futures were last down 0.2%, retracing earlier falls. Investor concerns are driven by the belief that Democratic wins at both federal and local level could slow the build-out of artificial-intelligence, Panmure Liberum strategist Joachim Klement said."The worry really is Democrats winning could slow the data-center build-out and AI growth," Klement said. But while the political results are stunning, the impact on markets is less seismic, the strategist said.S&P 500 futures dropped 0.2%, while contracts tied to the Dow Jones Industrial Average edged up 0.1%. Asian stock indexes were largely higher. The Shanghai Composite was up 2.2% and Hong Kong's Hang Seng index added 1.45%.Treasurys moved inversely to Nasdaq futures, with a sharp strengthening followed by a paring of gains, though yields were still lower across the curve. Ten-year yields last fell back around 2.5 basis points to 4.935% and 30-year yields hovered around 5.315%. Two-year yields edged lower to 4.610%.Oil contracts nudged higher, with benchmark Brent crude contracts for January delivery adding 0.4% to trade around $104.10 a barrel. President Trump acknowledged in an interview with The Wall Street Journal that higher gas prices resulting from the U.S.-Iran conflict were in part responsible for the Democratic sweep.Investors are weighing the impact of the midterms on Trump's strategy, with a Democrat-controlled Congress potentially able to constrain Trump's foreign-policy agenda.The dollar weakened and gold rallied back above $4,000 a troy ounce. Bitcoin hovered below $78,000.For the day ahead, investors will watch the final results trickle in and listen closely to Democrats for clues to their policy priorities. Outside of the election, U.S. data prints include the ISM services index for October, the ADP's report of private payrolls for October and the balance of trade for September. Qualcomm and McDonald's are among companies reporting earnings.Write to Joe Stonor at [email protected]