Markets React to AI Trade Tensions Ahead of US Midterms

Global markets experienced volatility on Monday as tensions in the AI trade resurfaced, overshadowing what could have been a quiet session ahead of the US midterm elections.

S&P 500 e-mini futures edged lower for a fourth consecutive day, falling 0.1% in early trading. Japanese markets were closed for a public holiday.

European futures also saw declines, with pan-region futures down 0.9%, German DAX futures falling 0.8%, and FTSE futures dropping 0.2%.

Oil prices steadied after a previous decline, with Brent crude rising 0.4% to $105.19 in Asian trading. This came as investors assessed the status of peace talks between the US and Iran.

A US official confirmed to Reuters that strikes had been carried out on Iran's Qeshm Island in the Strait of Hormuz, confirming an earlier report from the Wall Street Journal.

Voting in the US midterm elections begins on Tuesday, with opinion polls suggesting Democrats are favored to win the House, though the Senate race remains too close to call.

Prediction market sites Polymarket and Kalshi currently assign probabilities of 77% and 76%, respectively, that the Democrats will control the Senate, though traders are a little more distrustful this time after being wrongfooted during Brazil's presidential election.