European stock markets closed with widespread gains, in a session marked by the victory of the Democratic Party in the US midterm elections. After initial selling in futures, investors welcomed the prospect of a divided government in Washington, which could limit significant changes in fiscal and regulatory policies. The Stoxx 600 rose by 1.8%.
The financial sector led the gains, with an increase of over 3.5%. In contrast, defence was among the lagging sectors. Among the companies, Novo Nordisk stood out, driven by its quarterly results.
By indices, the IBEX 35 advanced by 3.0% supported by CaixaBank, Santander and BBVA. Meanwhile, the Euro Stoxx 50 gained 2.0%, while the DAX in Germany also recorded gains of over 2%
Key points of the session
The Democratic Party gained control of the House of Representatives and the Senate in the elections on 3 November. Markets initially reacted cautiously to the possibility of stricter regulation of artificial intelligence and data centres. However, Donald Trump's acceptance of the results and the prospect of greater difficulty in passing new legislative measures contributed to the recovery of the stock markets.
In the Eurozone, Eurostat's preliminary estimate showed that overall inflation rose to 4.0% year-on-year in October, up from 3.8% in September. The main contribution came from energy, whose prices increased by 20.8% year-on-year, while core inflation remained at 2.5%.
By European close, the S&P 500 was up 1.5%, the Nasdaq was up 2.2% and the Dow Jones was up 2.9%. The gains extended to most sectors, with the exception of Energy and Industry. In the technology sector, the performance was mixed, with declines in semiconductors and increases in software, especially among the large tech companies.
Sovereign yields showed similar behaviour on both sides of the Atlantic. In the United States, bonds regained ground amid the possibility that the new political balance in Congress will limit the expansion of public spending and new fiscal measures. In Europe, the rise in inflation in October put pressure on ECB rate expectations.
The yield on the 10-year German Bund stood at 3.27%, down 6 basis points. Meanwhile, the yield on the 10-year US Treasury fell by 7 basis points to 4.90%.
Commodities and currencies
The Brent fell by 7.7%, to 95.6 dollars per barrel, in a session of high volatility. Investors continued to assess the possibilities of diplomatic advances in the conflicts in Iran and Ukraine, against the risk of new supply disruptions.
The euro gained ground against the dollar. The EUR/USD rose by 0.2%, to 1.122 dollars per euro.
