WS #16779

The US midterm elections have concluded, but the immediate market reaction is muted as investors await the specific composition of the new Congress to assess policy continuity. Bitcoin has defended the $76,000 level, with analysts pricing in a high probability of political gridlock, which historically supports crypto assets as a hedge against legislative paralysis. This political backdrop provides a floor for risk assets, though the lack of a clear mandate may delay significant fiscal stimulus or regulatory shifts. In the Middle East, tensions continue to escalate, marked by a widening conflict in the Black Sea and Syrian reports of foiled attacks on oil infrastructure. These developments reinforce the ongoing energy supply risks, keeping oil prices elevated and supporting energy equities while pressuring airlines and shipping. The geopolitical instability acts as a persistent tailwind for defense stocks, offsetting broader tech weakness. Corporate earnings are mixed, with Teva Pharmaceutical and Enlight Renewable Energy beating expectations and raising guidance, signaling strength in healthcare and renewables. Conversely, Meta's free cash flow turned negative for the first time in a decade due to surging AI capex, a significant divergence from its revenue performance that highlights the heavy investment burden of the AI arms race. Meanwhile, HF Sinclair's record EPS underscores the peak profitability in the refining sector, though analysts warn against buying at cycle tops.