Stocks Rally and Oil Falls After Democratic Midterm Win

Brent crude fell nearly 9% in a single session while the Dow Jones opened 3.03% higher — two moves that moved in opposite directions on the same day, ara.cat reported, after Democrats secured majorities in both chambers of the U.S. Congress in midterm elections.

U.S. markets opened Wednesday on news that the Democratic Party would hold majorities in both the Senate and the House of Representatives. The Dow Jones and the S&P 500 began the session up 3.03% and 1.58%, respectively, and the Nasdaq, which groups technology companies, also started the day higher, up 1.44%, according to the report.

European indexes post their best sessions in months

The rally was not confined to Wall Street. In Europe, the Ibex-35 closed its best session since April, rising 3% to above 19,300 points. Banking, one of the heaviest-weighted sectors in the index, was the biggest beneficiary, with Santander, CaixaBank and BBVA each gaining more than 4%.

Across the rest of the continent, gains dominated the trading screens. Frankfurt’s DAX closed up 3.31%, Paris’s CAC-40 rose 1.96%, Milan’s FTSE MIB gained 2.18%, and in London the FTSE 100 closed up 1.79%.

Energy markets move the other way

While equities climbed, energy prices fell. Brent crude, the European benchmark, spent much of the day below $95 per barrel, a drop of nearly 9%. West Texas Intermediate, the U.S. benchmark, fell less than 1% and held above $95. European natural gas prices at the Dutch TTF hub dropped more than 8%, to below €85 per megawatt-hour.

Traders divide over energy costs and war impact

The report attributes the split to the political backdrop. Rising fuel, electricity and gas costs have been a foundation of the high inflation hitting much of Europe and the U.S., and the cost-of-living increase was one of the factors that most benefited Democrats in the election, in which voters blamed President Donald Trump for price rises tied to the energy and geopolitical crisis stemming from the war in Iran.

Analyst Javier Cabrera, in comments collected by the Efe news agency, said a Democrat-controlled Congress could confront Trump and pressure him to end the war in the Middle East and its impact on interest rates.

What remains unanswered

Whether a Democratic Congress can actually deliver on ending the conflict — or move interest rates — is not established in the reporting; the market reaction reflects expectations, not outcomes. Oil prices, meanwhile, remain near $100 a barrel for Brent despite the session’s drop, so the decline has not fully reversed the energy-driven inflation that shaped the election result.

More on this story: Democrats Regain Young and Minority Voters in Midterms