Brent crude plunges nearly 9% after Democratic election victory; Asian chip and data center stocks decline

November 6 - According to Reuters, after a series of major victories by the Democratic Party in the U.S. midterm elections, Asian morning trading saw pressure on oil prices, chip stocks, and the dollar, while most other assets advanced, with the market betting on prospects for de-escalation in the U.S.-Iran conflict.

Overnight, Brent crude oil futures plunged nearly 9%, falling below $100 per barrel, with a cumulative weekly decline of about 20%; if the decline continues through Friday's close, it will mark the largest weekly drop since April 2020. In Asian morning trading, oil prices tested the overnight low near $93.50. The retreat in energy prices drove bonds higher and yields lower, with the euro rising to about 1.1273 against the dollar, while the dollar hit a roughly one-month low and supported equities. The S&P 500 closed up 1.6%, European stocks reached a roughly two-month high; the solar supply chain led gains, as the market expects Democrats to increase support for renewable energy.

At the same time, Asian data center and related equipment suppliers weakened on expectations of tighter regulation. South Korea's chip-heavy KOSPI fell about 4% in morning trading, approaching a roughly seven-month low; Taiwan Weighted Index fell about 1.8%, and Nikkei 225 dropped about 0.5%. Multiple Democratic candidates opposing data center construction won in Texas and Georgia. Analysts believe AI and data center demand will remain strong in the long term, but may slow in the short term. The U.S. 10-year Treasury yield fell about 6 basis points overnight and dropped another 1 basis point to about 4.87% in Tokyo morning trading; the 2-year yield fell to about 4.56%.