All change, please

What a difference an election, and a day, makes. Markets initially cheered the Democrats’ sweeping US midterm victory, but the rally abruptly reversed as investors reconsidered its implications for the AI investment boom. Tech stocks plunged amid fears that political, regulatory and physical constraints could slow the enormous data-centre buildout, while falling Treasury yields pointed to wider concerns about the US growth outlook. The episode underscores the danger of extrapolating political change too quickly. A Democratic Congress constrains, but does not replace, Donald Trump; lower energy prices do not eliminate geopolitical risks; and Europe still faces difficult choices on security, trade, inflation and fiscal policy.