Equities: Global sector rotation comes into focus as markets rally after midterms - Deutsche Bank

The S&P 500 recorded its largest one-day rise since August after the US midterm elections, Deutsche Bank strategists note, while the NASDAQ and European shares also moved higher. In Asia, however, selling pressure on semiconductor and AI-related shares pointed to a wider rotation in global equity markets. Additional policy support from Beijing helped Chinese shares outperform their regional counterparts.

US equities rally as Asian markets diverge and technology shares weaken

"The 2026 midterms seem no different, as yesterday the S&P 500 (+1.58%) posted its best day in three months, whilst bond yields fell sharply around the world."

"And we even saw a decent rebound in tech stocks, with the NASDAQ (+1.44%) recovering despite fears 24 hours earlier that tech might see a fresh slump."

"This uncertainty has accelerated overnight with Nasdaq futures back down -1.18% and the KOSPI -5.68% lower dragged down by SK hynix (-9.60%) and Samsung (-7.57%)."

"Elsewhere in Asia, the Nikkei (-1.24%) is also under pressure, as chipmakers and AI-related stocks extended the previous session's declines. In contrast, Chinese equities are outperforming the region in what is developing into a big global rotation over the last 24 hours. The Hang Seng (+3.09%) is benefiting, after also being helped by Beijing unveiling fresh support measures that boosted sentiment toward domestic semiconductor companies."

"Meanwhile, Australia's S&P/ASX 200 (+2.61%) is also trading significantly higher. S&P 500 futures are down -0.28% so holding on to most of yesterday's gains so far with Stoxx futures (+0.11%) just about maintaining its big boost from yesterday."

"And it wasn’t just European bonds that outperformed, as European equities also put in a very strong day. In fact, the STOXX 600 (+1.82%) had its best day since June and the DAX (+2.22%) had its best day since April. European banks (+4.62%) also had their best day since April. So crudely a big rotation from data centres to everything else across the globe."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)