Equities: Post-midterm rally highlights global sector rotation - Deutsche Bank

Deutsche Bank strategists highlight that the S&P 500 posted its strongest daily gain since August following the US midterm elections, with the NASDAQ and European equities also advancing. However, semiconductor and AI-related stocks came under pressure in Asia, reflecting a broader rotation across global equity markets. Chinese equities outperformed regional peers amid fresh policy support from Beijing.

US equity rally contrasts with tech weakness and Asian divergence

"The 2026 midterms seem no different, as yesterday the S&P 500 (+1.58%) posted its best day in three months, whilst bond yields fell sharply around the world."

"And we even saw a decent rebound in tech stocks, with the NASDAQ (+1.44%) recovering despite fears 24 hours earlier that tech might see a fresh slump."

"This uncertainty has accelerated overnight with Nasdaq futures back down -1.18% and the KOSPI -5.68% lower dragged down by SK hynix (-9.60%) and Samsung (-7.57%)."

"Elsewhere in Asia, the Nikkei (-1.24%) is also under pressure, as chipmakers and AI-related stocks extended the previous session's declines. In contrast, Chinese equities are outperforming the region in what is developing into a big global rotation over the last 24 hours. The Hang Seng (+3.09%) is benefiting, after also being helped by Beijing unveiling fresh support measures that boosted sentiment toward domestic semiconductor companies."

"Meanwhile, Australia's S&P/ASX 200 (+2.61%) is also trading significantly higher. S&P 500 futures are down -0.28% so holding on to most of yesterday's gains so far with Stoxx futures (+0.11%) just about maintaining its big boost from yesterday."

"And it wasn’t just European bonds that outperformed, as European equities also put in a very strong day. In fact, the STOXX 600 (+1.82%) had its best day since June and the DAX (+2.22%) had its best day since April. European banks (+4.62%) also had their best day since April. So crudely a big rotation from data centres to everything else across the globe."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)