Markets fret blue wave will drown data centres
SPY•Markets in Asia and U.S. futures fell as investors worried Democratic control of Congress could bring more hurdles for data centres and other sectors. Treasury yields fell, the dollar weakened and Fed funds futures priced out about 6 basis points of rate hikes for next year.
1. Markets react to election
Asian markets and Wall Street futures fell after Democrats took the House and Senate, while European share futures also declined. The dollar weakened and Treasuries rallied as investors considered possible effects on data centres, AI, crypto, healthcare and financials.
2. Data centre concerns
Investors are concerned Democrats may favor more regulation of AI and data centres, and that Democratic governors could impose local hurdles on construction and requirements for water and power. Analysts highlighted Texas, where a change in governor could affect the state's data centre expansion. Passing federal legislation could be difficult because President Trump has vowed to veto bills and Democrats lack a veto-proof Senate majority.
3. Rates and upcoming events
Bond investors also considered the possibility of limits on future deficit spending, while the market awaited the Treasury's refunding announcement. Lower yields and a paring of expected rate hikes pushed the dollar broadly lower; Fed funds futures priced out about 6 basis points of hikes for next year. Wednesday's scheduled events included EU inflation and U.S. ISM data for October, the U.S. trade balance for September, a Riksbank policy decision and a speech by ECB chief economist Philip Lane.
