Jenson Holmes from Titan Wealth offers this week’s round-up of global markets
US equity markets entered the mid-term elections last week with history broadly on their side. Since 1928, mid-term election years have typically seen markets weaken ahead of voting as political uncertainty increases, followed by stronger performance once the result is known.
The S&P 500 has risen in the three months from early October in 21 of the last 23 mid-term years. This has been helped by reduced political uncertainty and, historically, more attractive valuations following pre-election weakness.
In 2026, the S&P 500 reached a record high in late May before making relatively limited progress through the summer and early autumn.
This time, however, the election result has created additional uncertainty for technology and AI companies. The success of candidates campaigning against further rapid expansion of data centres has raised concerns that obtaining planning permission, power and infrastructure for new facilities could become more difficult. This could therefore affect expectations for future spending on AI infrastructure and data-centre capacity.
These concerns contributed to an exceptionally difficult market session on Friday. The major US indices fell by between 4% and 6% and the technology sector was hardest hit.
Semiconductor shares also fell around 12%. Companies whose revenues are particularly dependent on investment by large technology groups, such as Microsoft, Amazon, Alphabet and Meta, came under significant pressure, reflecting concerns that new data-centre investment could slow if political and infrastructure constraints become more restrictive.
However, the impact across the technology sector may vary considerably between companies. Large cloud-computing providers, often known as “hyperscalers”, including Microsoft, Amazon, Alphabet and Meta, already operate significant data-centre infrastructure.
If demand for AI computing continues to increase while new capacity becomes more difficult to build, their existing facilities with reliable access to power could become increasingly valuable. This creates an important distinction between companies benefiting from the adoption of AI and more capital-intensive businesses whose growth is closely linked to continued rapid expansion of AI.
Access to power is also becoming an increasingly important consideration when developing data centres. Connections to the electricity grid are limited in some areas, while large computing facilities require significant and reliable electricity supplies. Companies providing dedicated power and generation solutions could therefore play a greater role in supporting future data-centre development.
Looking outside the US, attention in the UK focused on the Bank of England, which increased bank rate by 0.25 percentage points, as expected. All nine members of the Monetary Policy Committee voted for higher rates, although Catherine Mann supported a larger increase of 0.50 percentage points. The BoE now expects CPI inflation to reach almost 5% in the second quarter of next year and highlighted increasing inflationary pressures within the economy. A further rate increase at the December meeting therefore remains possible.
The outlook for interest rates and inflation will depend partly on energy prices and the strength of the UK economy. It is important to note that the BoE’s latest inflation forecasts used energy-price assumptions made before the recent decline in energy prices, although retail sales and business surveys have indicated some weakening in UK demand.
