Daily Financial Breakfast 4 November 2026: Democrats Take Control of Congress as Iran’s IRGC Reports Four Tankers Have Been Destroyed

Market News Today: Policy Decisions and Political Shifts Shape Trading

• Majorities in both chambers of the U.S. Congress went to the Democrats, an outcome that ING economists said would restrict President Donald Trump’s domestic agenda.
• Four oil tankers struck naval mines south of the Strait of Hormuz and were destroyed, Reuters reported, citing Iran’s Islamic Revolutionary Guard Corps.
• A 25-basis-point increase took the Reserve Bank of Australia’s cash rate to 4.85%. The 6–3 decision was accompanied by a more cautious stance towards further tightening.
• A one-year swap provided roughly RMB100 billion of liquidity from the People’s Bank of China, alongside its announcement that the foreign-exchange reserve requirement ratio would rise to 6% from 4%.
• October brought a rise in euro-area headline inflation to 4.0%; ECB Governing Council member Joachim Nagel said an increase in rates in December was very likely to be necessary.
• After taking its policy rate to 2.00%, Sweden’s Riksbank indicated that additional increases next year were likely, conditional on its inflation and economic outlook holding.
• With the Middle East war sustaining higher energy prices for longer, Bank of Canada Governor Tiff Macklem warned that additional rate increases may be necessary.
• Single-stock perpetual futures gained CFTC approval with oversight shared by the SEC and CFTC; a legal challenge was joined by Cboe, Citadel Securities and the Healthy Markets Association.
• An 8.4% decline is now forecast for Chile’s 2026 copper production after its copper commission lowered the estimate to 4.94 million tons. Copper traded below $14,000 per ton.

Dollar Weakens as Gold Recovers and Oil Retreats

Dollar Slides as Election Results Arrive

Below 101.50, the U.S. Dollar Index moved towards 101.25 in Asian trading on Wednesday as results from the U.S. elections arrived, taking it to levels last seen in late September. EUR/USD initially climbed to around 1.1240 in the Asian session before nearing four-week highs later on; sterling also gained, with GBP/USD heading towards 1.3500. The previous day, a recovery to around 0.6990 left AUD/USD 0.10% lower on the day, after a post-RBA decline to a two-week low of 0.6961.

Gold Regains $4,000 as Dollar Softens

A 3% daily rise put gold at around $4,041 on Wednesday, following its recovery through $4,000. The move coincided with U.S. dollar weakness after the Democrats’ congressional victory.

WTI Eases While European Gas Recovers

From approximately $96.10 per barrel in Wednesday’s Asian trading, WTI crude eased towards $95.00 in the European session against a backdrop of uncertainty over U.S.–Iran peace negotiations. In a separate observation, Commerzbank said European TTF gas prices had recovered towards €100 per MWh on Tuesday after falling earlier.

U.S. Election Results Shape & Fiscal Policy

Democratic Midterm Gains Leave Trump Facing Divided Government

Tuesday’s U.S. midterm elections left President Donald Trump facing divided government for the remaining two years of his term, as the Democrats took majorities in both the Senate and House of Representatives. ING economists judged the victory decisive with most of the votes counted.

According to ING, congressional control by the Democrats would restrict Trump’s domestic programme through legislative deadlock on tax, spending and other domestic matters. Although this would limit further fiscal expansion, the economists warned that sizeable budget deficits and deteriorating debt dynamics would continue to pose concerns. Borrowing could also face a temporary constraint from the debt ceiling, they said.

Geopolitical Tensions Threaten & Energy Security

Iran’s IRGC Reports Destruction of Four Tankers South of Hormuz

Reuters reported that Iran’s Islamic Revolutionary Guard Corps claimed on Wednesday that naval mines had destroyed four oil tankers seeking to navigate a route south of the Strait of Hormuz. The route was prohibited, according to the IRGC. The account of the tankers’ destruction was attributed to the Iranian force.

Central Banks Respond to & Inflation

RBA Delivers Divided Rate Rise to 4.85% and Signals Caution

Six Reserve Bank of Australia board members backed a 25-basis-point increase in the cash rate to 4.85%, against three who voted for unchanged policy. According to Commerzbank economists Charlie Lay and Dr. Henry Hao, those opposing the increase pointed to higher unemployment and a weak housing market. Governor Bullock suggested the RBA could pause to review incoming data without closing off its policy options.

Higher inflation forecasts from the RBA showed both headline and underlying measures remaining above 3% through the end of 2027. Only by mid-2028 was inflation projected to reach the midpoint of the bank’s 2–3% target. The persistence of inflation, together with the risk that elevated inflation expectations could become entrenched, remained a concern.

In overnight-indexed swaps, a further 25-basis-point rise in December was priced at a 10% probability, according to Commerzbank. The market allowed for just 8 basis points of tightening by February 2027, while also factoring in a reduction of 9 basis points by September 2027.

PBoC Adds RMB100 Billion as FX Reserve Ratio Moves Higher

Following discussions with the National Financial Regulatory Administration and the China Securities Regulatory Commission, the People’s Bank of China used a one-year swap to supply roughly RMB100 billion to the financial system. Societe Generale reported that the injection was equivalent to $15 billion.

To limit excessive appreciation of the yuan in one direction, the PBoC announced that banks’ foreign-exchange reserve requirement ratio would rise to 6% from 4% on 15 November. The move would withdraw an additional $24 billion in dollar liquidity, according to calculations by Reuters. The yuan’s longest winning run in three decades ended after 13 days.

An October loss of 8.3% for the CSI 300, the index’s weakest monthly result in more than a decade, preceded the measures. Among the concerns highlighted by Societe Generale were subdued household consumption, difficulties in property and the sustainability of AI-related earnings growth. Sentiment had not improved following either state-backed equity purchases in July or administrative measures to deter selling in October.

The higher reserve ratio unwinds the cut introduced in September 2023, which sought to contain rapid yuan depreciation and capital outflows.

Euro-Area Inflation Hits 4.0% as Nagel Flags December Tightening

Renewed euro-area inflation pressure provided the backdrop to Tuesday’s remarks by Bundesbank President and ECB Governing Council member Joachim Nagel. He said an ECB rate increase in December “is very likely to be necessary.”

At 4.0%, October’s flash headline inflation reading was up from September’s 3.8%, matching consensus and standing at twice the ECB’s target, according to Nordea. Energy accounted for roughly half of the headline rate, with prices rising 20.8% year on year. Following unusually low third-quarter figures, food inflation picked up to 1.6%.

An unchanged core reading of 2.5% was likewise in line with consensus. A slight increase brought services inflation to 3.3%, alongside a modest acceleration in non-energy industrial goods inflation to 1.2%. Nordea noted increases in transport-services inflation in several countries, although it found very little evidence of broader second-round effects across services.

Riksbank Takes Rate to 2.00% With Further Tightening Still Likely

A policy-rate increase by Sweden’s Riksbank brought the rate to 2.00%. In keeping with its September rate forecast, the bank indicated that additional increases over the coming year were likely if the outlook for inflation and economic activity remained intact.

In its assessment, Nomura’s research team drew attention to resilient GDP growth, high energy prices and faster CPIF inflation once temporary fiscal measures were excluded. The team noted a gradual climb in the September policy-rate projection through 2027, reaching a high of 2.43% in the first quarter of 2028. The estimated neutral policy-rate range was unchanged at 1.50–3.00%, according to the Riksbank.

The April 2026 halving of food VAT in Sweden temporarily influences annual inflation comparisons. Nomura highlighted its relevance to the inflation trajectory that follows.

BoC’s Macklem Warns Energy Costs May Require More Rate Rises

Appearing before the House of Commons Standing Committee on Finance on Tuesday, Bank of Canada Governor Tiff Macklem said “further rate hikes may be needed”. He said the Middle East war was leaving energy prices “higher for longer.” The testimony connected the bank’s ongoing inflation concerns with elevated energy costs.

Despite those remarks, Tuesday’s fluctuations in oil prices coincided with the Canadian dollar giving back its earlier advance against the U.S. dollar.

Regulatory Approval Faces Legal Scrutiny

Single-Stock Perpetual Futures Gain CFTC Approval Amid Court Challenge

Perpetual futures linked to individual equity securities may start trading on registered contract markets that are also recognised by the Securities and Exchange Commission, the Commodity Futures Trading Commission said on Tuesday.

Under the existing regulatory framework, the contracts had been deemed approved as security futures products, CFTC Chairman Michael Selig explained. Oversight would therefore be shared by the CFTC and SEC. A lawsuit contesting approval of the single-stock perpetuals was joined by Cboe, Citadel Securities and the Healthy Markets Association.

Industrial Commodities Face Output and Price Pressures

Chile Lowers 2026 Copper Forecast to 4.94 Million Tons

An 8.4% fall in 2026 copper output is now projected by Chile’s state copper commission Cochilco, which reduced its forecast to 4.94 million tons from a previous estimate of a marginal 0.6% decline. According to Commerzbank, weak output meant third-quarter production in the world’s largest copper-producing country reached its lowest in two decades.

For 2027, Cochilco reduced its estimate from 5.55 million tons to just under 5.1 million tons, implying a 3% recovery. Meanwhile, October U.S. copper imports held strong at 207,000 tons, Commerzbank said, citing IHS Markit data.

Despite this, Tuesday saw copper slip to a seven-week low below $14,000 per ton. Commerzbank attributed the fall to wider risk aversion associated with technology stocks.

BoE Decision and Employment Releases Lead the Calendar

• Bank of England Sets Out Rate Decision (5 November 2026): With Bank Rate currently at 3.75%, the Bank of England is due to deliver its policy decision on Thursday.
• U.S. Employment Figures Due (6 November 2026): Friday is the scheduled release date for the United States employment report.
• Canada Publishes Employment Figures (6 November 2026): The Canadian employment report is due for release on Friday.