WS #16846

The Democratic sweep in the US midterms is driving a massive 'gridlock rally' across US and European equity markets, with the Dow Jones Industrial Average set to open nearly +1,000 points higher. This political outcome is dampening fears of aggressive regulatory overreach, lifting European financials (Deutsche Bank +4.9%) and broadening the rally beyond the initial tech-heavy gains. However, the narrative is complicated by exit poll data showing 65% of voters believe Trump's policies worsened the economy, suggesting the rally may be driven by gridlock optimism rather than a clear pro-growth mandate. The political shift is also pressuring Musk-affiliated assets, with SpaceX and Tesla falling over 5% as the campaign's political spending yields negative market returns. In earnings, a mixed bag of results is emerging alongside the macro tailwinds. Avnet (AVT) and W.W. Grainger (GWW) delivered significant beats, signaling resilience in industrial distribution and supply chain sectors. Conversely, Datadog (DDOG) is extending steep declines despite a top-line beat, as weak revenue outlooks trigger a sell-off in cloud infrastructure names. In the European market, JD.com surged 5.3% on EU regulatory approval for its Ceconomy acquisition, while CVS Health raised full-year guidance ahead of its planned corporate split. Meanwhile, geopolitical tensions in the Middle East remain in a state of escalation, providing a persistent underlying risk to the broader market rally.