By Karim Hammam
The US dollar fell sharply on Wednesday after Democrats secured control of both the Senate and the House of Representatives in the midterm elections, raising concerns that increased regulation of artificial intelligence could slow economic growth.
Dollar hits one-month low
The dollar index, which measures the currency against a basket of six peers, dropped to its lowest level in a month. The pound and euro gained against the dollar, while the greenback also weakened against the yen and Swiss franc, traditional safe-haven currencies during uncertainty.
Bond yields decline as investors seek safety
The yield on the 10-year US Treasury fell nearly five basis points to 4.915% as investors moved into government bonds, anticipating political gridlock during the remainder of Donald Trump's term.
Stock markets volatile on AI regulation fears
Futures initially pointed to a sharply lower open for US equities, with the tech-heavy Nasdaq expected to slide on worries about prospects for AI companies. Later indicators suggested Wall Street could open higher after Trump struck a conciliatory tone and European markets rose. SpaceX shares fell 5% in premarket trading and Tesla dropped more than 4%, as Elon Musk, who invested $446 million in Republican-aligned groups, is seen as at odds with Democrats.
Gold surges past $4,000 an ounce
Gold prices rose 2.2%, breaking above $4,000 an ounce, as investors sought safe-haven assets. AI-related shares tumbled during Asian trading hours on expectations of stricter regulation under a Democrat-controlled Congress.
Analysts assess political gridlock impact
Market strategists noted that while Democrats' gains may lead to greater scrutiny of AI firms, Trump retains influence over trade, tariffs, foreign policy and existing regulations. Some analysts questioned whether a Democrat-controlled Congress will significantly alter policymaking given Trump's use of executive orders.
