Democrats lead strongly in the midterms; US stock futures plunge, the US dollar falls, US Treasuries rise, and Asian stock markets come under pressure.

Preliminary vote counts from the 2026 U.S. midterm elections indicate strong momentum for the Democratic Party, prompting a surge in market bets on a "Blue Wave" sweeping both chambers of Congress. Global markets reacted swiftly: U.S. stock futures dropped sharply, the dollar weakened, U.S. Treasury prices rose, and Asian stock markets came under broad pressure.

As early election results continue to emerge, the Democrats have secured the North Carolina Senate seat, pushing the probability of a Democratic sweep of both congressional chambers on prediction platform Polymarket to as high as 99%. S&P 500 index futures briefly turned negative, dropping 1% and erasing an earlier 0.5% gain; Nasdaq 100 index futures widened their drop to 2%. The U.S. dollar index fell more than 0.5% intraday, while the yield on 10-year U.S. Treasuries dropped by about 7 basis points to 4.89%.

According to CCTV International News, U.S. media reported that on November 3 local time, former North Carolina Democratic Governor Roy Cooper defeated Republican candidate Michael Whatley—who was endorsed by President Trump—in the federal Senate election, securing a key Senate seat for the Democrats. This victory broke the Republican Party's 18-year winning streak in the state's federal Senate elections.

In the key announced election results, Democratic momentum has clearly surpassed market expectations. In addition to Roy Cooper winning North Carolina, incumbent Georgia Democratic Senator Jon Ossoff is also expected to win re-election. Ossoff, who has risen as a party star for his persistent criticism of Trump’s use of the presidency for personal gain, is seen as a new force.

On the House side, Democratic candidates Lasher in New York and Paige Cognetti in Pennsylvania are both projected to win. As of this report’s release, prediction platform Kalshi showed Democrats with about a 99% chance of taking the House, and a 98% chance of winning the Senate, rapidly shaping the prospect of a sweep of both chambers.

After securing North Carolina, if the Democrats wish to control the Senate, they still need to not only maintain all their own seats but also capture three additional seats from the Republicans. The electoral situation continues to evolve.

The first reaction from investors to the Democratic wave was to reduce exposure to risk assets. S&P 500 futures dropped about 0.9%, Nasdaq 100 futures fell 2%, and Dow Jones Industrial Average futures declined by roughly 156 points, or 0.3%. At the same time, the VIX volatility index futures broke through 20, touching a key psychological level for market anxiety.

The U.S. dollar index weakened broadly, with the Bloomberg Dollar Spot Index dropping 0.4%. EUR/USD was up 0.6% to 1.1258, JPY/USD up 0.5% to 157.86, the Swiss franc led the G10 currencies with a 0.7% gain, and the Swedish krona also rose 0.6%.

U.S. Treasuries were the main beneficiaries in this round of trading. The 10-year Treasury yield fell to 4.89%, and Australia’s 10-year government bond yield dropped 4 basis points to 5.04%.

There's a clear logic behind the market moves. Investors generally believe that if the Democrats seize control of Congress, it would constrain Trump’s tax cut and pro-business policies, while also bringing stricter regulatory pressure on the tech and artificial intelligence sectors, especially with ongoing uncertainties surrounding datacenter construction policies. AI-related stocks had already seen a pullback in recent weeks on concerns about a slowdown in datacenter spending.

By contrast, a divided government setup usually means tighter fiscal spending and reduced federal borrowing pressure, which benefits Treasuries. Brij Khurana, portfolio manager at Wellington Management under Fidelity Investments, commented: "It’s too early to draw definitive conclusions, but the Democrats seem to be outperforming expectations. Divided government means recent years’ elevated fiscal spending will face constraints, and, historically, a divided government tends to be quite positive for U.S. Treasuries."

Andrew Ticehurst, Senior Rates Strategist at Nomura Securities in Sydney, also noted: "Early headlines and prediction markets both show the probability of a Blue Wave rising. This scenario is widely seen as dollar-negative and Treasury-positive, and the early Asian market moves align with this expectation."

In this context, Asian equities came under widespread pressure. The MSCI Asia-Pacific Index fell about 1% to 253.24 points. Nikkei 225 index futures dropped more than 3%, with the TOPIX index down 1.7%, ranking among the biggest declines in major Asia-Pacific markets. South Korea’s Kospi swung from an intraday high of 3.2% up to a sharp decline of 1.6%, making it one of the most volatile markets in this wave of election-driven shocks. Australia’s S&P/ASX 200 index fell 0.3%.

Some strategists noted that market volatility triggered by elections has historically been short-lived. Angelo Kourkafas, Senior Strategist at Edward Jones, stated that the election outcome may act as a "clearing event" to remove uncertainty, with the trajectory of AI themes and geopolitical dynamics remaining the main variables driving markets into year-end. He also pointed out that any major election-driven volatility may offer long-term investors a chance to accumulate on dips.

Continuing updates