Global Markets — Oil Prices Plunge Nearly 20% as Gold Surges Above $4,100 After US Election
Oil prices dropped sharply on Thursday as gold and other major financial assets advanced, reflecting investors’ changing expectations about the economic impact of the Democratic victory in the US midterm elections.
The election results have fueled expectations that increased political pressure on President Donald Trump could push his administration toward negotiating an end to the ongoing US-Iran conflict.
Brent crude futures fell nearly 9% overnight, slipping below $100 per barrel for the first time in two months.
The decline added to an already significant weekly loss, with Brent prices down approximately 20% since the beginning of the week. If the losses continue through Friday’s close, it would mark the largest weekly decline since April 2020.
The reduction in energy prices provided support for government bonds and stock markets while helping ease inflation concerns.
The MSCI All-World index rose 0.1%, following its strongest single-day performance since late July on Wednesday.
European stocks also moved higher. The STOXX 600 gained another 0.7%, bringing it closer to its record level reached in August.
Jim Reid, a strategist at Deutsche Bank, said the market reaction largely followed historical trends associated with US midterm elections.
He pointed out that the S&P 500 had ended higher one year after every one of the 20 midterm elections conducted since World War Two.
In the United States, the S&P 500 finished Wednesday’s session up 1.6%. Technology stocks, however, remained under pressure as investors weighed the possibility of tighter regulation affecting artificial intelligence infrastructure spending.
The Philadelphia semiconductor index declined 3.1%, adding to losses that had already erased approximately a quarter of its value over the preceding month.
The election results carry particular importance for technology companies after Democratic candidates opposed to additional data-center construction won races in Texas and Georgia.
Investors are increasingly concerned that greater government scrutiny of electricity consumption, infrastructure development and costs for consumers could restrict future investment in AI projects.
Technology shares across Asia also suffered significant losses. South Korea’s KOSPI dropped nearly 6%, moving closer to its lowest levels in seven months.
European companies connected to the semiconductor industry also recorded declines. Shares in ASML, Soitec and Infineon fell between 1.2% and 4%.
Renewable energy businesses, meanwhile, benefited from expectations that Democratic control of Congress could strengthen political support for clean-energy projects.
Denmark-based Orsted gained 2.6%, while Vestas shares increased 1%.
Oil trading continued to reflect changing expectations about developments in the Middle East.
Crude was last quoted 0.8% higher at $95 per barrel after falling nearly 10% over two days.
Market participants increasingly believe Trump will face stronger pressure to prevent further escalation of the conflict, particularly as rising energy costs have become a significant economic and political concern.
Trump acknowledged on Wednesday that the war contributed to Republican losses in the elections. Vice President JD Vance also addressed the issue directly, writing on X: “The reason we lost is the war.”
Gold recorded some of the strongest gains among major assets during the latest market movements.
As the US dollar and oil prices weakened, gold climbed above $4,100 an ounce, extending a 5% increase over two days. Reuters reported that the advance was the metal’s largest two-day gain since early April.
US government bonds also strengthened as prices moved higher. The yield on the benchmark 10-year US Treasury note declined 2 basis points to 4.87%.
Currency markets were meanwhile focused on the Bank of England’s forthcoming interest rate decision. The central bank was broadly expected to increase borrowing costs in response to inflationary pressures linked to elevated energy prices.
However, investors were also looking for indications of whether additional rate increases could follow next year.
The latest developments highlight the continued influence of political outcomes, energy market movements and geopolitical expectations on investment decisions across international financial markets.
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