Wall Street surged after the Democrats’ victory, as investors judged that political uncertainty was easing.
“Legislative gridlock is positive for markets,” Arun Sai, senior multi-asset strategist at Pictet Asset Management, told the Financial Times, adding that a divided government was expected to limit further fiscal expansion.
That remains to be seen, but oil prices immediately fell sharply, US bond yields declined and the dollar/euro trend shifted. The sharp drop in the VIX/CBOE captured the full change in the market backdrop.
WTI crude at $87.85, Brent at $95.04, the US 10-year yield at 4.825%, gold at $4,119 and the VIX/CBOE at 16.61.
The VIX/CBOE fell 20.21%, one of its biggest declines in 2026, in a move that was indicative of Arun Sai’s assessment.
The rally in New York futures spread to European stock markets, where the emphatic return of buyers in Frankfurt, Paris and elsewhere pointed more to a relief rally led by banks, with some industrial stocks along for the ride. Deutsche Bank rose 5.88% and BMW 5.50%, while the DAX gained 2.22% to 26,437 points.
As if traders and investors in Athens were going to turn down an invitation to the party. The banking index’s 2.81% gain to 3,121.33 points, with €265 million of the total €436 million traded in just four systemic bank stocks, leaves little doubt about who hosted yesterday’s session. Given that several traders had taken on risk by buying bank shares from the middle of Tuesday’s session at significantly lower prices, today will show how much “fast money” is involved.
I note Tuesday’s low and Wednesday’s high to give a sense of the volatility and leverage at play between 2,965 and 3,176 points. Some of those substantial gains will reasonably be “locked in” today or tomorrow.
For investors with a medium-term horizon, however, confirmation that 3,000 points is a reference level for the banking sector remains key. If possible, it should provide support for further gains as the four systemic banking groups complete the release of their third-quarter and nine-month results.
Alongside inflows into bank shares, the... wave lifted most large caps. The moves over the previous two days also reflected corporate activity, developments and financial results.
The FTSE 25 was around 6,827 points, with Coca-Cola HBC, GEK TERNA, TITAN, Metlen, AEGEAN and ElvalHalcor among the leading performers.
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