Global Markets Rally as Oil Plunges Below $100 After US Midterms, With Bank of England Rate Decision in Focus

LONDON — Global markets rallied on Thursday, November 5, 2026, as investors welcomed a decisive result in the United States midterm elections, sending stocks higher, the dollar to a one-month low and oil plunging below $100 a barrel, while traders turned their attention to a Bank of England interest-rate decision due later in the day.

According to Reuters reporting on Thursday, the dollar edged lower after Democrats swept to an overwhelming victory in the midterm elections, a result that cleared a major source of political uncertainty and fuelled a rally in global equities. The election outcome raised prospects of political gridlock in Washington and lowered expectations that US President Donald Trump will resume military strikes against Iran, Ray Attrill, head of foreign-exchange strategy at National Australia Bank, told Reuters.

The market moves were broad and, in places, dramatic. The S&P 500 closed 1.6% higher, European shares notched a two-month high, and the Dow jumped 1,569 points, or 3.0%, to close at 53,356, according to market reporting on Thursday. Brent crude futures dived nearly 9% overnight, falling below $100 a barrel, and have dropped by about 20% so far this week, Reuters reported.

Illustration: A busy stock exchange trading floor, with large green rising market charts on screens as traders react to a market rally.

What Happened

The clearest signal came from currencies and bonds. The dollar index, which measures the greenback against a basket of currencies, fell 0.06% to 101.41 on Thursday, after a 0.36% decline in the prior session, Reuters reported. The euro rose 0.12% to $1.1241, and the dollar had earlier touched a one-month low of $1.1273 per euro. The yen firmed after minutes of the Bank of Japan's September meeting reinforced expectations for further interest-rate hikes, while sterling held near a seven-week high ahead of the Bank of England's policy decision.

In Asia, the reaction was split. Broad stock indexes climbed on the clear election outcome, Reuters reported, but technology and data-centre shares fell. South Korea's chipmaker-heavy KOSPI slid 4% and was not far from a seven-month low in morning trade, while Taiwan's benchmark index fell 1.8% and tech equipment suppliers dragged Japan's Nikkei down 0.5%. Shares in data-centre companies and their equipment suppliers across Asia fell on expectations of tougher regulation, after Democratic data-centre opponents who campaigned in part on moratoriums on data-centre construction won victories in Texas and Georgia, Reuters reported.

Solar supply-chain stocks jumped the most, Reuters reported, in anticipation that Democrats will boost support for renewables. Shares in Tesla and SpaceX slid, according to market reporting on Thursday, after Democratic victories in the Senate and governor's race in Texas. In cryptocurrencies, bitcoin gained 0.60% to $80,660.59 and ether rose 0.45% to $2,428.15, Reuters reported.

Oil's Sharp Fall

The most striking move was in energy. Brent crude futures dived nearly 9% overnight, Reuters reported, and at $93.50 in the Asia morning, oil was testing overnight lows as traders bet that Trump, facing a Democratic Congress and hurt by high energy prices caused by the Middle East conflict, would be less likely to escalate the war with Iran.

Brent has dropped by about 20% so far this week, Reuters reported. If sustained through to Friday's close, it would make for the largest weekly drop in oil prices since a week in April 2020, when US crude briefly fell into negative territory. Tumbling energy prices encouraged a rally in bonds, which lowered yields: the yield on benchmark 10-year US Treasuries was down 6 basis points overnight and by a further basis point in early Tokyo trade to 4.87%, while 2-year yields fell about 2 basis points to 4.56%, Reuters reported.

For households and businesses, cheaper oil is a double-edged story. Lower fuel prices can ease the cost-of-living squeeze that helped drive the midterm result, but the speed of the fall also reflects traders pricing in a weaker outlook for the Middle East conflict and for global demand. Energy producers and oil-exporting economies, which only days ago were dealing with Brent above $117, now face a very different revenue picture.

Illustration: Oil pumpjacks silhouetted against a dramatic sky, beside a falling price chart, as crude prices drop sharply.

Background

The rally comes after weeks in which markets have been pulled in opposite directions by war, inflation and central-bank policy. The Federal Reserve left its benchmark overnight interest rate within the 3.75% to 4.00% range last Wednesday, Reuters reported, while acknowledging that inflation "remains elevated." Markets are pricing in an 81.2% chance of a rate increase of at least 25 basis points from the Fed at its December meeting, according to CME FedWatch, up from 77.4% in the prior session.

US economic data this week has kept that December hike in play. The ADP National Employment Report showed US private payrolls rose by 86,000 jobs in October, above the 69,000 estimate of economists polled by Reuters. The Institute for Supply Management said on Wednesday that its nonmanufacturing Purchasing Managers' Index dipped to 54.5 in October from 54.9 in September, suggesting the economy started the fourth quarter on solid footing, though economists expect a slowdown in activity, Reuters reported.

Central banks elsewhere are also still tightening. Minutes of the Bank of Japan's September meeting, when policymakers raised rates to a 31-year high of 1.25%, underscored expectations for further tightening, with one board member signalling scope for faster increases, Reuters reported. The Bank of England is expected to raise rates to contend with inflation pressure from soaring energy costs, although it may push back against investors' bets that several more increases will follow next year.

Why It Matters

The midterm result matters to markets for a simple reason: it changes what Washington can do next. A Democratic Congress makes new large spending or tax measures harder to pass, and, in the view of traders quoted by Reuters, makes a renewed escalation of the war with Iran less likely. That combination — less policy uncertainty, less war risk — is what lifted stocks and bonds and pushed the dollar and oil lower.

It also matters because the rally is uneven. The winners so far are renewable-energy and consumer-facing stocks that benefit from a more stable environment, while chipmakers, data-centre suppliers and energy producers have fallen. That rotation suggests investors are not simply celebrating; they are repricing which sectors face tougher regulation and which benefit from cheaper energy and lower bond yields.

For central banks, the market moves complicate an already difficult decision. Falling oil prices should, over time, ease inflation, but energy-driven inflation is still running hot: UK inflation rose to 3.5% in September, and euro-zone inflation hit 4.0% in October, according to recent official data. The Bank of England must decide on Thursday whether to raise rates into a rally, or to signal that the peak is near.

What Happens Next

The immediate focus is the Bank of England's decision, due on Thursday, with markets expecting an increase in the Bank Rate from 3.75% to 4.00%. Sterling was up 0.38% at $1.3462 on Thursday, after rising to a more than seven-week high of $1.3503 ahead of the announcement, Reuters reported. Governor Andrew Bailey's remarks after the decision will be watched for any pushback against bets on further hikes next year.

On Friday, the US government's closely watched employment report is due, with economists polled by Reuters expecting payrolls to have advanced by 65,000 in October after increasing 29,000 in September. A stronger-than-expected report would reinforce the case for a December Fed hike; a weak one could revive doubts about the economy's momentum.

Oil traders will also watch whether Brent holds below $100 through Friday's close. If it does, the week will rank as the steepest weekly oil-price fall since April 2020 — a milestone that would underline just how quickly the market's view of the Middle East conflict and of global demand has changed since the midterm vote.

Illustration: The Bank of England building in London, with British pound banknotes and coins in the foreground, ahead of its interest-rate decision.

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FAQ

Why did global markets rally after the US midterms?

According to Reuters, the decisive Democratic victory cleared a major source of political uncertainty, raised prospects of gridlock in Washington, and lowered expectations of renewed US military strikes against Iran, lifting stocks and bonds while pushing the dollar lower.

How far did oil fall, and why?

Brent crude futures dived nearly 9% overnight to below $100 a barrel, and have dropped about 20% so far this week, Reuters reported, as traders bet that a Democratic Congress makes escalation of the war with Iran less likely.

What is expected from the Bank of England on Thursday?

Markets expect the Bank of England to raise its Bank Rate from 3.75% to 4.00%, to contend with inflation pressure from soaring energy costs, although the Bank may push back against bets on several more increases next year, Reuters reported.

Which stocks rose and which fell?

Solar supply-chain stocks jumped the most on expectations of greater Democratic support for renewables, Reuters reported, while chipmakers, data-centre companies and their suppliers fell in Asia, with South Korea's KOSPI sliding 4%.

What data could change the picture next?

Friday's US employment report is the next big test: economists polled by Reuters expect payrolls to have risen by 65,000 in October. A strong report would reinforce bets on a December Fed rate hike, while a weak one could revive doubts about growth.

Sources

• Reuters, "Dollar edges lower as US election outcome cheers global markets," November 5, 2026.
• Reuters, "Oil and data centre stocks sink after US midterms," November 5, 2026.
• Reuters, "US services sector activity cools slightly in October; inflation remains elevated," November 4, 2026.
• Reuters, "Central banks take a breather, though more hikes are to come," October 29, 2026.