The key facts

  • Investors await the US midterm elections, which could constrain Trump's second term
  • Tech giants continue to invest hundreds of billions in data centers and chips, testing investors' patience
  • Brent oil fell 1.2% to $103.55 on hopes for a deal with Iran

Markets await the midterm elections

On Tuesday, global stock markets fluctuated amid growing nervousness over debt-financed spending by AI companies, but traders' main attention was focused on the US midterm elections, which could reshape the final two years of Donald Trump's presidency. This is reported by AFP. Americans vote on Tuesday: Democrats hope to take control of Congress and impose the first meaningful checks on Trump's second term. The elections have effectively become a nationwide verdict on his policies, and sentiment, according to the agency, has sharply turned against the Republicans due to the rising cost of living and the war with Iran.

AI spending and pressure on the tech sector

“Investors sat tensely, holding their breath ahead of the US midterm elections,” noted AJ Bell market head Dan Coatsworth. In his words, “uncertainty around the timing of energy price declines added to worries about excessive AI spending, creating a cocktail of anxieties.” Earnings reports from Amazon, Alphabet, Meta and Microsoft showed that the companies intend to keep pouring hundreds of billions of dollars into data centers and chips, even as investors lose patience waiting for returns. Apple on Monday reported record sales and profits, but warned that rising memory chip prices would hit its margins in the coming months; its shares fell 2.3%. Meanwhile, shares of AI chipmakers Nvidia and AMD rose. In Asia the pressure intensified: shares of South Korea's SK hynix and Samsung fell, and the Kospi index in Seoul lost 3.6%. In Europe most indices were barely changed, while London's FTSE 100 slipped 1.1% under the weight of oil and gas companies such as BP and Shell.

Oil falls on hopes over Iran

Oil continued to decline on fresh hopes for an end to the standoff between the US and Iran, despite overnight US strikes on an Iranian island in the Strait of Hormuz. The strikes came hours after Trump said a deal with Tehran “could happen”; traders also cited unconfirmed reports in Middle Eastern media about progress on Iran's nuclear program and frozen funds. “The oil market is behaving as if — or hoping that — there is some truth in the reports,” said Briefing.com analyst Patrick O'Hare. According to AFP, Brent fell 1.2% to $103.55 a barrel, and WTI fell 0.4% to $96.04. In New York, the Dow slipped 0.2%, the S&P 500 rose 0.5%, and the Nasdaq gained 0.9%.