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Morning Brew November 5 2026
Summary: Will Risk sentiment hold?
Good morning.
The Bluenami triggered a powerful wave of optimism across financial markets on Wednesday. The election result was broader and more decisive than many investors had expected, strengthening hopes for political gridlock, less fiscal expansion and an earlier end to the US–Iran conflict.
The immediate reaction was strongly risk-on. Global equities rallied, oil plunged 8.7%, and the Swiss SMI crossed 15,000 for the first time. Defence shares and parts of the AI sector were notable exceptions. The US dollar weakened, while gold, silver, Bitcoin and Ethereum surged.
Equity markets are giving back some gains this morning as investors digest Wednesday’s sharp moves:
US 500: −0.4% US Tech 100: −1.5 Oil remains under pressure. At 04:26 GMT, Brent futures were down another $0.80, or 0.85%, at $93.82 per barrel. WTI fell $1.20, or 1.36%, to $86.92. US equities rallied sharply as investors priced in the consequences of Democratic control of Congress. The S&P 500 closed 1.6% higher at 7,688.62, while the Dow Jones surged 3.0% to 53,356.12—its largest one-day gain since April 2025. The Nasdaq Composite advanced 1.4% to 25,736.51. Technology megacaps led the move: Amazon: +8.3% Apple: +6.6% Microsoft: +6.4% Alphabet: +5.8% Healthcare stocks also rallied strongly on expectations that a Democratic Congress could support Medicaid expansion. HCA Healthcare gained 6.5%. Defence stocks moved in the opposite direction as investors reassessed future spending and geopolitical risks. Lockheed Martin dropped 6.9%, and Northrop Grumman declined 4.5%. Semiconductor stocks also lagged, with Nvidia and Micron both closing lower. Unum Group tumbled around 19% after cutting its full-year earnings guidance. SpaceX and Tesla were among the laggards, losing more than 3%. Elon Musk had spent almost half a billion dollars supporting Republican candidates, including efforts to retain Republican control in Texas, where both companies are based. After the closing bell, Qualcomm fell 7.5% after issuing a below-consensus first-quarter profit outlook. Expedia dropped around 8.8% despite raising its full-year gross-bookings forecast, as its fourth-quarter guidance disappointed. Arm Holdings slipped 1% even after providing slightly stronger third-quarter revenue guidance. Despite Wednesday’s rally, the Nasdaq 100 remains close to its 200-day moving average. This continues to be an important technical level following the recent technology correction. European equities also rallied strongly following the US election result. The Stoxx Europe 600 gained 1.8% to close at 657.40. Germany’s DAX surged 2.2% to 26,437.67, its third-highest close on record, while the FTSE 100 advanced 1.8% to 10,829.21. Banks led the rally. HSBC gained 4.8%, while Santander was among the largest positive contributors. Renewable-energy stocks also performed strongly, with Ørsted and Vestas benefiting from expectations of a more favourable policy environment. Logitech jumped 8.7% Defence stocks were the main laggards, with a Goldman Sachs basket of European defence companies falling as much as 4.1%. Toyota reported its first profit increase in six quarters and raised its annual outlook by 15%. A weaker yen and robust demand for higher-margin hybrid vehicles offset declining sales in China and the Middle East. Brent crude plunged 8.7% on Wednesday to $94.62 per barrel, extending a multi-day sell-off. The Democratic sweep increased expectations that the US–Iran conflict could end sooner, reducing the geopolitical risk premium embedded in energy prices. Brent fell below $100 per barrel for the first time since late August. Asian energy shares are likely to reflect the move as regional markets digest the sharp decline. The fall in oil prices also has broader implications. Lower energy costs could ease inflation pressure, support household purchasing power and reduce the need for aggressive monetary tightening. However, the market remains sensitive to any renewed escalation in the Middle East. Gold surged 3.3% to $4,060.70 per ounce, reclaiming the psychologically important $4,000 level. Silver gained 4.9% to $52.22 per ounce. Both metals benefited from falling Treasury yields and a weaker US dollar. Gold and silver were estimated to have added approximately $1 trillion in combined market capitalisation following the election result. Cryptocurrencies also rallied, with both Bitcoin and Ethereum benefiting from the broader improvement in risk appetite and dollar weakness. Government bonds rallied across major markets as investors reduced expectations of further fiscal expansion and responded to the sharp fall in oil prices. Indicative 10-year yields were: US Treasuries rallied across the curve, with yields falling by around five to eight basis points. The 10-year yield closed near 4.89%, down 7.9 basis points, while the 30-year yield fell 5.2 basis points to 5.28%. The two-year yield declined more modestly to 4.59%. The move reflected two main factors: expectations that divided government will limit further fiscal stimulus, and the oil-price decline reducing inflation concerns. Rate expectations remain broadly stable There has been no major change in expectations for US monetary policy. Traders still anticipate a Federal Reserve rate increase in December, followed by one additional hike next year. The situation in Switzerland changed slightly. Expected cumulative rate increases declined from 50 to 44 basis points, probably because lower energy prices may reduce inflation pressure. The Bank of England’s policy decision is today’s main scheduled event. A rate increase is considered highly likely, so the accompanying guidance may prove more important than the decision itself. Markets are also likely to continue digesting the political and economic consequences of the US election. Attention will then shift toward Friday’s US nonfarm-payrolls report, which could determine whether the Federal Reserve’s expected December increase remains fully priced. The Democratic sweep produced an unusually broad market reaction: equities rallied, oil collapsed, bond yields fell, the dollar weakened, and precious metals and cryptocurrencies advanced. The key question is whether these moves represent the beginning of a lasting change in market leadership or merely an aggressive initial response to an unexpected political result. Falling oil prices and yields could support risk assets, but investors still face uncertainty around inflation, monetary policy, geopolitics and corporate earnings.
GER 40: −0.3%
Gold: +1.5% to $4,117
Silver: $52.60
EUR/USD: 1.1260
USD/JPY: 157.90
EUR/CHF: 0.9170
USD/CHF: 0.8140
The results sent Toyota’s shares sharply higher in Tokyo and provided further evidence that its focus on hybrids is paying off. The world’s largest automaker now expects an operating profit of ¥3.9 trillion, equivalent to approximately $24.6 billion, for the financial year ending in March. This followed a better-than-expected 34% increase in operating income during the July–September quarter.