Stocks fall hard on the Democratic sweep, then steady, as investors price in gridlock and tougher scrutiny of the AI buildout

The first trade on the election was a sell order. In Asia, chipmakers Samsung, SK Hynix and TSMC slid, South Korea's KOSPI fell 1.6 percent and Japan's Nikkei fell 3 percent coming back from a holiday, and European futures were down 1.4 percent. The selling centred on the artificial intelligence trade. Traders told Reuters they were pricing in tighter regulatory scrutiny of technology and AI companies under a Democratic Congress, and a harder road for the data centre buildout that has carried tech spending, including in Texas, where the new Democratic senator, James Talarico, has criticised the pace of construction.

Bonds moved the other way. Money went into Treasuries as a haven, the 10 year yield fell 6 basis points to 4.906 percent as of November 4, and the dollar fell with it. The euro rose 0.5 percent to 1.1249 dollars and sterling rose 0.37 percent to 1.3464 dollars in the Reuters account. Cryptocurrencies fell on the prospect of stronger regulation. Analysts quoted by Reuters said a Democratic sweep also puts further tax cuts on ice and slows government spending growth, which bond traders read as a smaller supply of new debt.

By the American morning the move had partly reversed. A Dow Jones market update reported Nasdaq futures up 0.2 percent, S and P 500 futures up 0.2 percent and Dow futures up 0.3 percent, after the early falls, with strategists saying the clarity of the result, and a balance of power between the president and Congress that keeps both sides in check, steadied buyers. Chip stocks rallied in that later account despite the regulatory worries. Shares in Elon Musk's Tesla and SpaceX fell about 5 percent in premarket trading in the same update. Brent crude for January delivery added 0.4 percent to about 104.10 dollars a barrel.

None of this settles what the market does next. The figures above are the morning of November 4, and the traders quoted in both accounts said the same thing in different words: the first reaction to a surprise result is a position being unwound, and the lasting move depends on what the new Democratic majorities say they intend to do first.