What Drives the Market❓Top Morning News ⏰ (November 5, 2026)

Markets are focused on the outcome of the US midterm elections. Democrats took both chambers by a clear margin: according to CNBC, they hold at least 250 seats in the House of Representatives and at least 54 in the Senate. They won even in districts that Republicans had redrawn in their favor. The new majority gives Democrats subpoena power to run investigations, and analysts are already warning that their main bargaining chip could be a fight over the debt ceiling in 2027, which markets dislike.

After the defeat, Trump is taking a conciliatory tone. He told CNBC he can work with Democrats on "many more things than people understand." Vice President JD Vance openly blamed the war with Iran for the Republican loss. Voters felt it in their wallets through expensive fuel, so the market assumes Washington now has a stronger reason to look for a diplomatic solution rather than escalation.

There are signs of easing in the Middle East, but still no deal. Trump said the US currently has no plans for military action, and Qatar has stepped up its mediation. However, an Iranian official admitted that the two sides "still remain far apart." Late in the Asian session, the Islamic Revolutionary Guard Corps (IRGC) reported that two tankers and a tugboat caught fire in the Strait of Hormuz, and that a tanker on an "unapproved route" hit a mine. These reports have not been independently confirmed.

The election also hit the data center sector. Texas elected Democrat Gina Hinojosa as governor, and she has promised tougher rules for data centers. In the same state, Elon Musk spent a record $224 million backing Republican Ken Paxton, yet the Senate race was won by James Talarico. Goldman Sachs estimates that about 45% of planned US data center capacity sits in states that could tighten regulation, though it expects any pauses to be short-lived.

In other political news, Chinese authorities have refused to approve SoftBank's $5.4 billion acquisition of ABB's robotics division, according to the Financial Times. That is another blow to Masayoshi Son's AI plans. In the US, a White House commission has postponed the hearing of Fed Governor Lisa Cook to December 14. The commission is meant to decide whether allegations about her mortgage applications justify removing her. Cook denies all of them.

Among central banks, today belongs to the Bank of England. The market expects the first hike of this cycle, by 25 bp to 4%, after rising energy costs pushed up UK inflation. The minutes of the BoJ's September meeting (a hike to 1.25% on a 7–2 vote) show the board supports further hikes, and one member did not rule out speeding them up. The board named the roughly 50% rise in oil prices since July as a key inflation risk. Meanwhile, SNB Chairman Martin Schlegel admitted that October inflation (1.5%) surprised the bank, which strengthens expectations of a Swiss hike in December.

Falling oil is also changing the Fed debate. Futures still price a high probability of a December hike, but Citi argues that a lasting reopening of the Strait of Hormuz could turn the Fed from hikes to cuts. In Asian data, Japan's services PMI rose to 51.7, but the composite PMI fell to a five-month low as hiring slowed. Australia's trade surplus jumped to A$2.8 billion, the highest in seven months, and Indonesia's Q3 GDP grew 5.47% y/y (forecast 5.18%).

On Wall Street, Wednesday brought a rally, but with clear rotation. The Dow Jones gained more than 1,570 points (about 3%), its best day since April 2025, and the S&P 500 rose 1.6%. The main driver was falling oil: WTI dropped more than 8% to $88.12. Consumer and defensive stocks rose, for example Walmart (+3%), and Darden and Keurig Dr Pepper hit new highs.

Results within the tech sector diverged sharply. Hyperscalers gained, and Apple hit an all-time high. Investors hope slower data center construction will cut capital spending at Microsoft and Amazon and lower memory prices, which weigh on Apple's margins. The beneficiaries of the AI infrastructure buildout fell instead: Nvidia, AMD, and data center operators CoreWeave, Nebius and IREN. Jim Cramer and JPMorgan's Michael Cembalest are cooling the excitement: the market is driven by the business cycle (rates, commodities, the Fed, earnings, the pace of AI investment), and elections do not change it.

This morning, futures suggest the rotation is continuing. Nasdaq-100 futures are down about 1.2%, S&P 500 futures about 0.3%, and Dow Jones futures are up about 0.3%. Analysts disagree on AI: Citrini Research believes the risk for AI infrastructure has tilted to the downside and that investment growth has peaked. UBS, on the other hand, raised its AI spending forecast to $1.4 trillion, but named the 2027 debt ceiling fight as the key risk for bonds.

Asia is clearly split: chip stocks are falling while the rest of the market rises. South Korea was hit hardest: the Kospi fell about 4.8% and the Kosdaq about 4.3%. The scale of the selloff triggered a so-called sidecar, a five-minute halt to program trading. SK Hynix lost about 9% and Samsung Electronics about 6.7%.

The Kospi is worth a wider look. Despite record share buybacks by Korean companies in August and September, the index kept falling. It has dropped from its June peak around 9,000 points to about 5,430, a decline of roughly 40%. Buybacks are clearly not enough to stop capital flowing out of Korean AI-related stocks, and the pace of buybacks is already slowing noticeably.

Japan looked similar. The broad Topix rose about 1.4%, helped by real estate, retail and pharmaceuticals. The Nikkei 225, however, fell about 1.5% even though 168 of its 225 stocks rose, because a few heavily weighted tech names dragged it down. Advantest lost about 11.7%, Lasertec about 11.8%, Tokyo Electron nearly 10%, and SoftBank about 5.8%. SoftBank took a double hit: Arm's decline and China's block on the ABB deal.

China moved the opposite way. The Shanghai Composite rose about 3.6%, the Hang Seng about 3%, and the Hang Seng Tech more than 5%. Alibaba and Tencent each gained about 6.4%, and Baidu about 4.9%. Chinese tech giants are untouched by worries about US data center regulation, and they also benefit from cheaper oil. In Australia, the ASX 200 rose about 1.4%, and data center operator NextDC soared 48% after Goodman Group and Digital Realty announced plans to buy up to 9.9% of the company.

In currencies, the dollar is weakening along with oil and bond yields. EUR/USD is around 1.1263, USD/JPY around 157.80, and AUD/USD has broken above 0.70 (about 0.7013), helped also by the strong Australian trade surplus. The yen is supported by the hawkish BoJ minutes, and the pound faces a test today with the BoE decision.

Oil keeps falling on hopes of a deal with Iran. Brent is around $97 and WTI around $88 per barrel. Technically, WTI is testing a key support zone at $86.80–87.00, where the 100- and 200-day moving averages meet the 50% Fibonacci retracement of the July–September rally. A close below that zone would open the way to $82.21 and then $80. Buyers first need to reclaim $88.00–88.75, then $95.

These declines could reverse quickly, though. The new tanker incidents reported by the IRGC are a reminder that a deal is still far off, and one bad headline could stop the selloff. ADNOC denied a Bloomberg report about a third pipeline bypassing Hormuz that other producers would also use. Europe's energy crisis continues: natural gas is up about 9% over the week.

Gold is benefiting from the new balance of forces. It rose about 3% on Wednesday, its biggest gain since August, and is climbing further today to around $4,135 per ounce. This time the gains come not from rising tensions but from cheaper oil, a weaker dollar and lower yields. Citi sees this as the start of its scenario: a target of $4,500 within three months and $5,000 over 6–12 months, if falling oil prompts the Fed to change course.

Qualcomm (QCOM) shows how good results can still fall short. On Wednesday the stock gained 5.3% (to $173.19) after it announced a multi-year deal with SpaceX for the Starlink Mobile 5G network infrastructure, covering "tens of thousands of cell sites." After the close, however, it fell about 7.4% to around $160. Revenue came in at $10.44 billion versus the expected $10.11 billion, but was down 7% y/y. Adjusted EPS of $2.17 was in line with consensus, and the midpoint of next quarter's EPS guidance ($2.15–2.35) came in below expectations.

Qualcomm's report shows a shift in its business model. Smartphone chip revenue fell 26% y/y, while the automotive segment grew 89% to $1.99 billion. The company expects revenue outside smartphones to grow more than 60% in fiscal 2027. The data center business is expected to bring in more than $650 million in Q1 and end the year at a $7 billion annual run rate, helped by the partnership with Amazon. The market, however, focused on capex that was higher than expected ($2.49 billion vs $1.86 billion) and on product price increases forced by more expensive semiconductors.

Arm also beat expectations and is still falling. Revenue grew 27% y/y to $1.44 billion (consensus $1.38 billion), and adjusted EPS was $0.52 versus $0.47. The results were driven mainly by licensing (+50% y/y), while royalties, the most recurring part of the business, disappointed at $670 million versus the expected $712 million. Next quarter's guidance only barely beat consensus, so after falling 5.3% during the session, the stock is down another 2% or so after hours. Even the outlook for up to $2 billion in revenue from Arm AGI CPU processors in fiscal 2027–2028 and a server market share above 60% by the end of 2026 did not help.

Other after-hours moves in the US: AppLovin jumped about 24% on better-than-expected results and guidance, and Coherent gained 7%. Expedia lost more than 7% on weaker guidance, and Snap disappointed on user numbers (495 million). According to the WSJ, AstraZeneca offered about $10 billion for Rhythm Pharmaceuticals, whose shares jumped 28%. Berkshire Hathaway bought $27 million more of Sirius XM, which fits the rotation from AI toward value stocks.

Europe and Japan have a busy earnings day. Toyota reported operating profit of ¥1.13 trillion, well above expectations (¥965 billion), raised its full-year operating profit forecast to ¥3.90 trillion from ¥3.40 trillion, and expanded its share buyback to ¥1.3 trillion. ArcelorMittal had weaker sales ($16.47 billion vs $17.1 billion), but EBITDA beat expectations ($2.02 billion vs $1.89 billion). The result, however, was weighed down by $852 million in impairments and a one-off $293 million charge related to its operations in Ukraine.

Commerzbank posted net profit of €859 million, slightly above expectations, but operating profit (€1.31 billion) missed consensus. The bank kept its full-year net profit target of "at least €3.4 billion," below market expectations (€3.54 billion). Siemens Healthineers beat on revenue (€6.78 billion), slightly missed on adjusted EBIT (€1.08 billion), gave 2027 EPS guidance of €2.20–2.40, and announced it will rename itself "Healthineers." Given the selloff in Asia, European semiconductor stocks are worth watching at the open.

Bitcoin regained some energy after the election, and buyers are returning to the market. The key level is around $82,000: a lasting break above it could open the way to a further rebound, while a rejection there would mean a return to consolidation. Crypto is driven by the same factor as tech stocks: the rotation away from AI-related assets.

What to expect from today's session: the main event is the Bank of England decision at 1:00 p.m. CET (a hike to 4% is expected), along with new inflation forecasts and signals about further moves. At 2:30 p.m. CET, US weekly jobless claims are released. Tapestry, Kimberly-Clark and ConocoPhillips report before the session, and Airbnb, Akamai, Affirm, Lyft and Mattel after it. In Tokyo, Sony and Nintendo report after the close. The key question today is whether the post-election rotation from AI to the rest of the market will last, or whether, as Cramer warns, it will reverse after Friday's US jobs report (NFP).