Investors Reduce Positions Ahead Of The US Midterm Elections Vote

The start of November trading confirms a deep stagflation-driven rebalancing across US markets. On Monday, the Dow Jones (US30) gained 0.41%. The S&P 500 (US500) fell 0.51%, while the technology-heavy Nasdaq (US100) closed down 1.07%. The mixed performance reflects capital rotation away from capital-intensive Big Tech and into defensive and cyclical sectors (Walmart +3.4%, Amazon +2.2%) amid declining Treasury yields. The surge in volatility in Oracle (-8.8%), triggered by massive $20 billion dilution through equity and debt issuance, highlights growing investor concerns about debt servicing costs and the profitability of AI models. The correction in semiconductor stocks (AMD -7.5%, Micron -5.8%) and the decline in ExxonMobil (-4.0%) following WTI’s drop below $96 further intensified market fragmentation ahead of the midterm elections.

The pullback in oil prices amid diplomatic progress between Washington and Tehran, mediated by Qatar, immediately reduced US inflation expectations. This weakened the Federal Reserve’s hawkish case for an immediate rate hike in December, depriving the US dollar of a key source of support. Investors are reducing long US dollar positions ahead of the November 3 midterm elections, pricing in a “split government” scenario (Split Congress), which could block further fiscal initiatives and shift the entire burden of economic stabilization onto monetary policy.

In Europe, Germany’s DAX (DE40) gained 0.63%, France’s CAC 40 (FR40) rose 0.98%, Spain’s IBEX 35 (ES35) advanced 1.63%, and the UK’s FTSE 100 (UK100) ended the session 0.29% higher. The retreat in WTI crude toward $96 per barrel eased pressure on profit margins in Germany’s industrial and transportation sectors, supporting shares of Airbus, MTU Aero Engines, and other energy-intensive companies.

The sharp decline in oil prices below the psychologically important $100-per-barrel threshold (WTI near $96.50-$97.35 and Brent around $104.77) following October’s impressive 15% rally was a natural market response to a shift in geopolitical rhetoric. The emergence of tangible signs of diplomatic progress through Qatari mediation and Tehran’s willingness to engage in peace talks after Supreme Leader-backed expansion of President Masoud Pezeshkian’s authority significantly reduced tensions surrounding the Strait of Hormuz. For the Donald Trump administration, facing substantial domestic political pressure ahead of and during the congressional midterm elections due to surging fuel prices, the easing of the Middle East risk premium provided a much-needed macroeconomic respite.

In Asia, Japan’s Nikkei 225 (JP225) declined 0.33%, China’s FTSE China 50 closed 0.44% lower, Hong Kong’s Hang Seng (HK50) gained 0.42%, and Australia’s ASX 200 (AU200) finished the previous session up 0.30%.

The Reserve Bank of Australia’s (RBA) decision and Michelle Bullock’s remarks delivered what markets interpreted as a classic “hawkish move with a dovish undertone,” sending the Australian dollar below the $0.7000 level to a two-week low. Although the cash rate was raised as expected to a twenty-year high of 4.85%, the actual split within the Board (6 votes to 3) and the removal of explicit guidance toward further tightening were interpreted by investors as signals to take profits and prepare for a pause at the December meeting. The central bank openly acknowledged mounting risks of economic cooling and household vulnerability, effectively neutralizing near-term monetary support for the national currency.

The People’s Bank of China’s (PBoC) decision to raise the foreign-exchange reserve requirement ratio from 4% to 6% sent a clear signal of excess US dollar liquidity withdrawal and the regulator’s intention to artificially restrain one-sided yuan appreciation. The retreat in USD/CNH toward 6.66 highlights local resistance from Beijing around the 6.64-6.65 area. At the same time, the fundamental divergence between explosive export growth (+36.3% year-over-year) and weakening domestic PMI readings suggests that the central bank is attempting to protect the profitability of Chinese exporters while preventing excessive appreciation of the national currency amid weak domestic demand.

• S&P 500 (US500) 7,541.40 -38.67 (-0.51%)

• Dow Jones (US30) 51,983.98 +213.67 (+0.41%)

• DAX (DE40) 25,981.09 +162.88 (+0.63%)

• FTSE 100 (UK100) 10,761.33 +31.55 (+0.29%)

• USD Index 101.80 -0.08 (-0.08%)

News feed for: 2026.11.03

• Australia RBA Interest Rate Decision at 05:30 (GMT+2) – AUD, AU200 (HIGH)

• Australia RBA Rate Statement at 05:30 (GMT+2) – AUD, AU200 (HIGH)

• Australia RBA Press Conference at 06:30 (GMT+2) – AUD (MED)

• Switzerland Consumer Price Index (m/m) at 09:30 (GMT+2) – CHF (HIGH)

• US JOLTs Job Openings at 17:00 (GMT+2) – USD (MED)

• New Zealand Unemployment Rate (q/q) at 23:45 (GMT+2) – NZD (MED)