Hong Kong (AFP) – Asian stocks fell with the dollar Wednesday, with the Democrats enjoying big early gains in the US midterms as they look to take control of both houses of Congress, which analysts said could lead to gridlock on Capitol Hill.

Issued on: 04/11/2026 - 03:41

Tens of millions of Americans cast their vote in the crucial polls that have been pitched as a referendum on Donald Trump's presidency amid anger at surging petrol prices, tariffs and the Iran war.

While Republicans were widely expected to lose control of the House, the Senate has been considered on a knife-edge, though the chances of a Democrat flip were boosted after they captured North Carolina.

The result handed Democrats a crucial gain in their bid to overcome the Republicans' 53-47 Senate majority.

A Democrat win would deal a hefty blow to Trump's agenda for his final two years in the White House, and analysts warned it would likely mean very little gets done in Washington in that time.

"A narrow blue wave may be largely priced in," said Chris Weston at Pepperstone. "A commanding one could force markets to rethink Trump's remaining policy agenda and the political trajectory into 2028.

"Democratic control of Congress would increase the potential for legislative gridlock, fiscal brinkmanship, debt-ceiling disputes, and congressional investigations."

However, he added that "the president would retain considerable executive authority, so the implications for individual sectors are far from straightforward".

Trump threatened in a telephone interview with the CBS network on Tuesday to be "Mr Veto" and block any Democratic legislation if they win.

Prediction markets indicated a "blue wave" for the Democrats, with Polymarket saying they were 100 percent likely to take the House and 99 percent to win the Senate.

The prospect of Congress coming to a standstill weighed on the dollar and Treasury yields, with observers pointing out that such a scenario would restrict spending.

"Typically, when we get a divided government, it has been historically pretty good for Treasuries," said Brij Khurana at Wellington Management.

Asian equity markets were also down, with Tokyo losing more than three percent as the yen spiked against the greenback, weighing on exporters.

There were also losses in Hong Kong, Shanghai, Sydney, Seoul, Singapore and Taipei.

Tech firms were also under pressure as investors continue to fret over the AI investment boom and when firms that have pumped billions into the sector will eventually see returns, if ever.

In Tokyo, chipmaker Kioxia plunged more than 13 percent, while Advantest and SoftBank lost more than eight percent. And in Seoul, SK hynix shed as much as three percent, with Samsung almost two percent down.

Oil prices extended Tuesday's drop as investors kept tabs on the Middle East after Trump confirmed US strikes on Iran but played down speculation he was preparing to resume bombing after the election.

"We seem to be getting everything we want," he told the Financial Times newspaper on Tuesday.

"I'm ready, we're ready. We're locked and loaded if we need to go, but there may be no reason for it."

His Iranian counterpart Masoud Pezeshkian said his government was still trying to resolve the crisis "through dialogue", adding that "no one will benefit from this war" if it reignited.

However, Iran's chief negotiator, Mohammad Bagher Ghalibaf, said the Islamic republic was "ready for battle with its finger on the trigger", while Deputy Foreign Minister Kazem Gharibabadi said Tehran retained the right to "legitimate self-defence".

Key figures at around 0230 GMT

Tokyo - Nikkei 225: DOWN 3.6 percent at 60,835.36 (break)

Hong Kong - Hang Seng Index: DOWN 0.4 percent at 23,428.32

Shanghai - Composite: DOWN 0.1 percent at 3,606.18

Euro/dollar: UP at $1.1249 from $1.1191 on Tuesday

Pound/dollar: UP at $1.3465 from $1.3413

Dollar/yen: DOWN at 158.06 yen from 158.75 yen

Euro/pound: DOWN at 83.35 pence from 83.43 pence

West Texas Intermediate: DOWN 0.5 percent at $96.65 per barrel

Brent North Sea crude: DOWN 0.2 percent at $103.41 per barrel

New York - Dow: DOWN 0.4 percent at 51,786.72 (close)

London - FTSE 100: DOWN 1.1 percent at 10,638.43 (close)

© 2026 AFP

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