The FTSE 100 rose on Wednesday as traders reacted to a historic Democrat victory in the US midterms, which will have deep ramifications for US policy and Trump’s economic agenda.
London’s leading index jumped 1.1% as the tech-heavy NASDAQ futures ticked 0.9% higher.
However, equity futures were choppy overnight as traders weighed the benefits and potential pitfalls of Democrats winning both the House of Representatives and the Senate by wide margins.
The AI trade has been the engine of growth for the US economy, and with Democrats sweeping to victory across the US, concerns have grown that the industry could face more red tape.
“Technology stocks have been particularly sensitive to the outcome, with concerns that Democratic control of Congress could lead to greater scrutiny of AI investment, data centre expansion and the broader technology sector,” said Daniela Hathorn, Senior Market Analyst at Capital.com.
“However, the recovery in Nasdaq futures suggests investors are beginning to recognise that a change in congressional control does not necessarily translate into an immediate change in economic policy. The substantial AI investments already underway are unlikely to be reversed overnight, although greater regulatory scrutiny could add to the challenges facing a sector already struggling with concerns about elevated valuations and monetisation.”
Beyond the AI trade, the Democrats’ victory raises several questions about how Trump will react to such a crushing defeat and how he will use his veto to bring the legislative agenda to a grinding halt.
“The big risk is uncertainty around how Trump could act in the coming months following such a result,” said Russ Mould, investment director at AJ Bell.
“Gold jumped 2.7% to $4,038 per ounce, which suggests that investors have added a little protection to their portfolio as a ‘just in case’ precaution. The precious metal may also be responding to incipient fears that the Democrats may go on a spending spree if they get the chance.”
UK interest rates
Closer to home, UK investors will have one eye on tomorrow’s Bank of England interest rate decision when the MPC is expected to vote to increase
Maike Currie, VP Personal Finance, PensionBee, comments: “The Bank of England is caught between a rock and a hard place. Inflation is heading in the wrong direction, but raising interest rates risks piling further pressure on households already struggling with the cost of living.”
“A quarter-point rise may sound modest, but for millions of mortgage borrowers, the real pain is yet to come. According to UK Finance, more than 2.3 million fixed-rate mortgage deals expire in 2027, and many households will find themselves taking out new deals at much higher rates than they previously enjoyed.”
But this rate hike is largely priced into stocks, and markets will be more concerned with commentary around the decision and the outlook for future hikes.
FTSE 100 movers
Investors were prepared to take the glass-half-full approach on Wednesday, and most FTSE 100 stocks were higher at the time of writing.
Lion Finance stormed to the top of the leaderboard, jumping 7% after reporting a 21% increase in Q3 profits. Lion Finance is now up 40% for the year and a top 5 FTSE 100 performer for 2026.
Rising gold prices drove a rally in Fresnillo and Endeavour Mining; both precious metals miners were more than 6% higher.
FTSE 100 banks were all higher, with Standard Chartered rising 4.8%. HSBC added 4.5%.
Defence stocks BAE Systems and Babcock fell 4% and 2.2%, respectively, presumably because a weaker Trump could lead to a step down in the Middle East conflict and possibly give Putin a reason to consider his next moves.
Weir Group shed 7% and was the FTSE 100’s top faller after warning of a tougher outlook.