Equities: How are Democratic gains shaping global market reactions? – Deutsche Bank

US equity futures, especially technology stocks, have come under pressure following Democratic gains in Congress, as investors worry about tighter AI regulation, Deutsche Bank notes. With major US indices having recovered in the previous session, European equities continued to face pressure, while Asian markets traded mixed.

How is tech-led selling shaping US futures and divergent global equities?

"That backdrop helped US equities to finally stage a recovery, with the S&P 500 (+0.36%) picking up after 3 consecutive declines. That was led by the tech sector, with the NASDAQ (+0.83%) posting an even bigger advance, whilst the Philly semiconductor index (+2.63%) rebounded after falling by -11.6% over the previous three sessions."

"When it comes to the market reaction, there’s been a clear selloff in US equity futures, led by the tech sector. In part, that reflects investor expectations that Democratic control in Congress might lead to tougher regulation on AI, and futures on the S&P 500 are down –0.42% this morning, whilst those on the NASDAQ 100 are down -0.49%. However, S&P futures were down over -1% earlier, so they’ve pared back a decent chunk of those earlier losses, and there’s been a rally for US Treasuries as well, given that divided government has generally made it harder for fiscal stimulus to be passed."

"In Asia, there’s been a similar pattern overnight, with several of the most tech-exposed indices posting sharp losses, although they’ve recovered from earlier in the session. Nevertheless, Japan’s Nikkei is currently down -2.09% this morning, whilst South Korea’s KOSPI (+0.03%) is now basically flat, but was down more than -4% at the lows earlier. Meanwhile other indices have posted gains, including the Hang Seng (+0.89%), the CSI 300 (+1.02%) and the Shanghai Comp (+0.83%)."

"However, European equities underperformed their US counterparts, largely as they caught up to the late selloff in the US session the previous day, with the STOXX 600 closing -0.58% lower. And this morning, European equity futures are also trading lower, with those on the STOXX 600 down another -0.66%. "

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