Oil plunges $7.58 as Republicans blame Iran war for midterm losses

Market highlights:

• WTI crude oil declined $7.58, reaching $88.51
• S&P 500 gained 1.7%
• Gold climbed $135 to $4063
• US 10-year yield decreased 6 basis points to 4.89%
• NZD was the top performer, while USD lagged

Markets had a monumental day, recalibrating after the Republican defeat in the midterm elections. Vote counting is still ongoing, but a large Democratic majority in the House is assured, and Senate races in Alaska and Mississippi are projected to go blue, which would give Democrats 56 seats in the Senate.

Republicans are engaging in a blame game, with the Iran war at the forefront, voiced by JD Vance among others. Democratic leaders have stated they would end the war and tariffs, which could create an interesting dynamic, though control will not shift until January. The market did not wait for the outcome, as WTI crude dropped sharply on the day.

The decline in oil pushed Treasury yields lower and gold higher. Crypto also performed surprisingly well, despite potential regulatory headwinds ahead.

In the foreign exchange market, the dollar was a modest loser. The decline in oil was a drag, but hyperscalers welcomed a potential slowdown in data centers, as it would improve near-term free cash flow and reduce the need to raise capital. Microsoft and Amazon were a major tailwind for equities, rising about 7% each.