Global markets trade cautiously ahead of US midterm elections

US midterm elections and potential legislative gridlock

The US midterm elections are scheduled to take place on 3 November 2026. Market consensus indicates the current administration will likely lose control of Congress, which would restrict legislative power and limit structural bills.

The market is entering a volatile week characterized by an unwinding process and structural caution, according to a macro technical expert. High-performing technology and semiconductor stocks are showing signs of damage as these assets, which previously acted as market armor, are now suffering. The most important market changes are currently taking place in the debt and credit sectors.

Investors are also watching for signs that price pressures are easing, which could create room for a less restrictive monetary policy stance from central banks.

Optimism over US-Iran deal impacts crude oil prices

Markets are showing optimism regarding a potential deal between the US and Iran to fully reopen the Strait of Hormuz, following recent statements from Tehran. Ground News reported that oil prices have fallen sharply as markets react to potential progress in these negotiations during the US midterm elections.

December-delivery Brent crude oil prices decreased by 3.2% to $109 a barrel due to the possibility of a US-Iran deal. Analysts suggest the election results could influence the Trump administration's flexibility and potentially lead to increased military tensions with Iran.

Falling crude oil prices are among the factors supporting the DAX, which could potentially break above the 26,000-point level, according to cmcmarkets.com.

Apple earnings and AI investment scrutiny

Investors are focused on major corporate earnings, particularly Apple's, to assess how artificial intelligence and technology investments are affecting profitability. Apple is scheduled to release its earnings results on the evening of Monday, 2 November 2026.

The 조선일보 published news regarding these events six hours prior to the report on Monday, 2 November 2026.

Federal Reserve policy and US Treasury yields

Expectations for tighter Federal Reserve monetary policy are rising due to persistent US inflation risks, strong economic activity, and rapid price increases. Money market estimates indicate a greater than 70% probability of a Federal Reserve rate hike before the end of the year.

Upcoming nonfarm payrolls data is expected to influence these projections.

This 10-year US Treasury note yield fell for the third consecutive week, remaining at 4.94% on Monday. The US dollar traded sideways at 101.9 on Monday.

European markets and regional economic challenges

European stock markets opened with mixed results on Monday, 2 November 2026, with Brussels and its neighbours showing little enthusiasm.

The Milan stock exchange is exhibiting caution, aligning with a broader trend across European markets where indices remain flat. The European Central Bank is increasingly expected to raise interest rates next month, driven by persistently high energy prices in Europe.

In France, civil unrest is occurring as student unions organise high school sit-ins because Paris' education commitments were deemed insufficient.

Asian equity performance and manufacturing slowdown

Asian equity markets traded positively near Monday's close, with the exception of Japan. The Nikkei 225 fell 0.1%, while the Kospi rose 2.6%, the Shanghai Composite gained 0.6%, and the Hang Seng increased by 0.6%.

Manufacturing Purchasing Managers' Index data across the region indicates a slowdown in economic demand. October readings were 53.3 for Japan, which was unchanged, 52 for China, and 54.7 for India, which was a decline.

Gold prices rebound after October decline

Gold prices dropped 3.6% to $3,870 per ounce on 30 October 2026, pressured by global monetary policy tightening. The metal experienced rebound buying on 2 November 2026, climbing 0.6% to $3,899 per ounce.