WS #17033

The market is digesting a bifurcated reaction to the US midterm elections, characterized by a sharp rotation away from speculative AI infrastructure names toward hyperscaler profitability and defensive sectors. While the broader tech-heavy QQQ has broken its 200-day moving average, signaling a potential trend shift, major cloud providers (AMZN, MSFT, GOOG) have bucked the trend with gains, suggesting the selloff is concentrated on the supply side (NVDA, MU) rather than demand. OpenAI’s CFO has reinforced this by confirming that AI data center investment remains on track regardless of the election outcome, dampening fears of a policy-induced CapEx freeze. Simultaneously, geopolitical risks are escalating in the Middle East, with Gulf oil flows dropping due to rising Strait of Hormuz shipping risks and Ukraine reporting over $23 billion in damages to Russian refineries. This energy supply shock is creating a mixed-cohort environment: benefiting energy and defense names while pressuring airlines and shipping. In the macro sphere, the BOJ’s Ueda highlighted persistent corporate savings, hinting at structural shifts in global capital flows, while the Fed’s recent policy stance continues to anchor bond yields as a ballast against equity volatility.