Global stock markets rebounded sharply after falling earlier in the day, following the Democratic Party's victory in gaining control of both chambers of the U.S. Congress.

The S&P 500 index rebounded by 2.18%, the Nasdaq index rose by 3.13%, the Dow Jones Industrial Average increased by 2.16%, and the Russell 2000 index gained 2.31%. Japan's Nikkei 225 index recovered by 5.09% from its intraday low, and South Korea's KOSPI index also rose by 4.71% from its intraday low.

At this time of recovery, investors are assessing the impact of a Democratic victory on Trump's remaining two years in office. The Democrats could prevent legislation and investigate the government after January 3, 2027; however, Trump still retains the veto power, and the Democrats lack the two-thirds majority required to override a veto. This limits their ability to change Trump's economic policies or to restrict military actions against Iran.

Investors' reactions may be more of an expectation of a political deadlock than a judgment of significant policy changes. A divided government could make it more difficult for either side to push through new legislation.

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