The week in Breakingviews: After the deluge
SPY•The article reviews market reactions to the U.S. midterm elections, including a roughly $2 trillion Thursday selloff in the Nasdaq Composite and two-day declines of 13% for SpaceX shares and 14% for Tesla shares. It also discusses possible effects on mergers, data-center construction, oil markets and Chinese equities.
1. Election market reaction
The article says the rejection of President Donald Trump’s Republican Party was emphatic, as was the condemnation of artificial intelligence data centres. States representing 41% of planned U.S. server farm capacity chose governors who had promised to pause construction; a stock market selloff wiped roughly $2 trillion off the Nasdaq Composite on Thursday.
2. Deals and scrutiny
The article notes that companies may try to complete deals before a future administration increases antitrust scrutiny, while mergers will still face scrutiny from authorities in other countries, especially China. It says Tesla and SpaceX shares fell 14% and 13%, respectively, in the two days after the vote, as Elon Musk was identified as a potential target of congressional investigations.
3. Other market concerns
The article says investors may face another U.S. debt-ceiling showdown in 2027 and that oil markets appeared to see a Middle East peace deal as more likely, though escalation remained possible. Chinese equities had been sliding since June, pushing the CSI 300 into the red for the year, while Beijing was making emergency market rescue tools permanent facilities.
