US stocks surged on Wednesday after Democrats secured control of both houses of Congress in the midterm elections, easing political uncertainty following President Donald Trump’s acceptance of the results. The Dow Jones Industrial Average jumped 1,569.40 points, or 3.03%, to close at 53,356.12, its strongest session since April 2025. The S&P 500 gained 1.58% to 7,688.62, while the Nasdaq Composite advanced 1.44% to 25,736.51.
The rally followed Democratic victories in the House of Representatives, Senate and several key gubernatorial races, including Texas. Investors assessed the prospect of a divided government, with Congress potentially limiting major policy changes during the remainder of Trump’s presidency.
Economically sensitive stocks led the gains as investors moved beyond technology shares. Walmart climbed 4%, while Bank of America rose 3%, supported by improved market sentiment.
Technology stocks also advanced, although concerns remained about potential restrictions on artificial intelligence infrastructure. CoreWeave and SpaceX weakened following the Democratic victory in Texas, where the incoming governor has proposed a moratorium on new data centres.
Oil prices plunged more than 8% amid renewed expectations of a diplomatic resolution to the Iran war. US Vice President JD Vance linked the Republican election losses to the conflict and its impact on inflation, while Trump indicated he did not intend to launch further strikes against Iran.
US Treasury prices also rose as investors anticipated that a divided Congress could constrain government spending initiatives.
Australian Market Outlook
Australian shares are set to open sharply higher on Thursday, with December S&P/ASX 200 futures up 181 points, or approximately 2%, to 9,037. The strong lead follows Wall Street’s broad-based rally after the US midterm elections, with investors responding positively to reduced political uncertainty and the prospect of greater constraints on US government policy. The sharp decline in global oil prices could weigh on local energy producers while easing inflation concerns across other sectors. Domestically, investors will continue assessing the Reserve Bank’s latest interest rate increase, which lifted the cash rate by 25 basis points to 4.85%, its highest level since 2008. National Australia Bank will release its full-year financial results, providing an update on lending conditions, margins, credit quality and the outlook for Australia’s banking sector.
