Markets Weaken After Change in Course

In brief

• European stocks rose on Wednesday after the Democratic win in the US congressional elections.
• US stocks fell sharply on Thursday, led by technology companies, with the Nasdaq down about 4.6 percent.
• Investors fear tighter AI regulation under a Democratic Congress, and analysts see long-term effects still unclear.

European Markets React to Election Results

European shares firmed on Wednesday after the open. The pan-European STOXX Europe 600 index, which tracks exchanges in Britain and selected EU countries, rose 0.5 percent to 648.9 points shortly before 9:30 a.m. Central European Time (Akcie v Evropě díky americkým volbám posílily – Novinky.cz). The index moved higher even though STOXX 600 futures had fallen as much as 1.4 percent earlier.

Democrats Take Both Chambers of Congress

They also won in traditional Republican strongholds for the first time in several generations. Republican President Donald Trump, whose term ends in January 2029, now faces a Congress in which his party is in the minority (Americké volby rozhýbaly trhy. V Česku mohou zlevnit hypotéky – Novinky.cz). Jan Čermák, an analyst at ČSOB, said the president remains powerful because he holds veto power and can block legislation.

Markets Weaken After Change in Course

On Thursday, US stocks fell sharply, particularly technology companies (Akcie v USA utrpěly nejprudší pokles za půl druhého roku – ČT24) (Americké akcie prudce klesají – Novinky.cz). The Nasdaq Composite was down about 4.6 percent shortly after 5:00 p.m. CET, and Nvidia shares were down around 7 percent. The Dow Jones fell about 2.3 percent and the S&P 500 more than 3 percent. Investors fear that Democrats will tighten oversight of artificial intelligence and that companies will slow the construction of data centers.

Impact on the Czech Republic and Europe

The dollar weakened slightly against the Czech koruna, the pound and the euro after the election, while oil prices fluctuated. Economists have so far only estimated the long-term effects. Much will depend on the conflict between the US and Iran, which is complicating oil and gas trade through the Strait of Hormuz. According to analysts, developments could eventually make mortgages cheaper in the Czech Republic.

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