China’s yuan slides to two-week low as PBOC moves to slow its rally
Iran’s IRGC says four tankers destroyed by mines south of Hormuz, two vessels detained
Trump allies are pointing to the Iran war as the reason for the election disaster
US futures slide as Democrats lead midterm count, AI data centre fears hit tech
Nikkei drops 3% as Democratic midterm gains hit AI and chip stocks
Update: Iran says Hormuz stays shut until demands met as US deal remains far off
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China buyback loan applications top 200bn yuan as PBOC steps up stock support
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Central bank gold buying jumps 42% in Q3 as high prices hit jewellery demand, WGC says
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Summary:
US stock index futures fell as Democrats led the midterm count in both chambers, with S&P 500 e-minis around 7,510 and Nasdaq futures around 27,710
AI-linked stocks led Asian losses on fears of tougher US scrutiny of data centres: the Nikkei fell 4.4%, the Kospi 3.3% and the Kosdaq 2.5%
Iran’s Revolutionary Guards claimed four tankers were destroyed by mines south of Hormuz and a US MQ-9 drone was shot down. Neither claim is confirmed
Brent traded around $103 and WTI around $96, as Iran-US talks remained stalled
New Zealand unemployment rose to 5.7%, an 11-year high, denting the case for a December RBNZ hike
China stepped up stock support and moved to slow the yuan’s rally, while Shanghai and Hong Kong edged lower
BMW issued a second profit warning, Canada reported progress in US trade talks, and central bank gold buying jumped
US midterms drive risk-off move
Asian markets fell sharply on Wednesday as early results from the US midterm elections showed Democrats ahead in races for both the House and the Senate, prompting investors to dump AI-related stocks. No chamber had been formally called by late in the Asian session.
S&P 500 e-mini futures traded around 7,510 and Nasdaq futures around 27,710, with technology bearing the brunt of the selling. Traders are pricing in more friction for AI and data centre investment, along with the prospect of gridlock and drawn-out bargaining over the debt ceiling and fiscal policy if Democrats take control of Congress.
AI infrastructure became a campaign issue. The Wall Street Journal reported that voter opposition to data centres is strikingly bipartisan, though Democratic candidates have tended to be more sceptical of AI. Democratic candidates for governor in Georgia, Texas and Michigan have called for temporary bans on new data centre construction.
Japan was hit hardest in Asia, retruning from a Tuesday holiday. The Nikkei fell 4.4%, deepening losses through the session as chip equipment maker Advantest, memory chip maker Kioxia, SoftBank Group and fibre-optic cable makers came under heavy selling. South Korea’s Kospi fell 3.3% and the Kosdaq 2.5%, reflecting the market’s heavy exposure to AI chips.
The selling overshadowed strong results overnight from AMD and Super Micro Computer, both of which beat forecasts and guided higher on AI demand.
Iran tensions and oil
Brent crude traded around $103 a barrel and WTI around $96, as tensions around the Strait of Hormuz intensified.
Iran’s Islamic Revolutionary Guard Corps said four tankers had been destroyed and were still burning after striking naval mines south of the strait, and that two other vessels had been detained. Later, it claimed to have shot down a US MQ-9 drone over the strait, which it said was the 56th of its kind. Neither claim had been independently confirmed.
The claims came as a senior Iranian official told Reuters that Iran and the United States remain far from a deal to end their war. Tehran says the strait will stay closed until Washington waives oil sanctions, ends its naval blockade and releases frozen funds. Qatari mediators said feedback from both sides was expected within 36 hours. President Donald Trump said the US was ready to act but might have no reason to, while Israeli Prime Minister Benjamin Netanyahu has hinted at an attack this week.
The US also updated its security alert for Saudi Arabia, warning of possible Houthi attacks on airports and critical infrastructure and restricting staff travel to areas including the Qatif oil region and the Yanbu export hub.
New Zealand jobs miss
New Zealand’s unemployment rate rose to 5.7% in the third quarter, an 11-year high, against forecasts of 5.5%. Employment fell 0.1% and wage growth slowed to 2.0% a year. The data weakened the case for the Reserve Bank of New Zealand to resume rate hikes in December after its surprise hold last week, and two-year swap rates fell. NZD/USD traded around 0.560 ahead of Saturday’s general election. AUD/USD was around 0.696.
China support measures
Chinese markets were little changed, with the Shanghai Composite down 0.1% and Hong Kong’s Hang Seng down 0.2%. The People’s Bank of China said applications for its share buyback loan scheme had topped 200bn yuan, after it cut the scheme’s rate to 1% and made it permanent following the CSI 300’s worst month in a decade. The central bank also moved to slow the yuan’s rally, raising banks’ foreign currency reserve requirement and setting a much weaker than expected fixing, which pushed the yuan to a two-week low. A private survey showed services activity growth slowed to a three-month low in October.
Also in focus
BMW issued its second profit warning of the year, cutting its 2026 automotive margin forecast to between minus 0.5% and plus 0.5%, citing faster job cuts, extra production costs and weak demand in China. Its third-quarter results are due on Wednesday.
Canadian Prime Minister Mark Carney said trade talks with the US would intensify, with some red lines removed and Washington asking for less and offering more, though important areas remain unresolved.
The World Gold Council said central bank gold purchases rose 42% in the third quarter, offsetting a slump in jewellery demand. It expects India’s demand to fall to a six-year low in 2026, as high prices and a weak monsoon hit buyers.
This article was written by Eamonn Sheridan at investinglive.com.
