Markets Priced Two Elections Before Anyone Took Office

On Tuesday, Americans voted. On Wednesday, South Africans did.

By Wednesday's close, the Dow had its best day after a midterm election in 44 years, and the rand had gained more than 1%. By Thursday's close, the S&P 500 had its worst day since April 2025, the Nasdaq had lost about $2.5 trillion in value, and Nvidia was down 9%.

Nobody newly elected has done anything yet. The new US Congress does not sit until January. South Africa's official results are only due on Sunday, and most big councils will need coalitions that do not exist yet.

That is the story this week. Markets did not react to policy. They reacted to what politicians said they would do, months before they could do it, and they changed their minds about it in a day.

The Big Signal

What Voters Did

CBS News projects that Democrats will control the House, and at least 54 Senate seats, with Alaska and Mississippi still uncalled. In Texas, Democrat James Talarico beat Ken Paxton in the Senate race, and Gina Hinojosa unseated Governor Greg Abbott.

A day later, South Africa held its local government elections. With about 72% of votes counted on Friday, the ANC had roughly 32% nationally, down from 46% in 2021. The Democratic Alliance had about 24%.

The Pump and the Dump

Wednesday felt like relief. The election was over, oil fell sharply on hopes of less escalation in the Iran conflict, and investors no longer needed to guard against a messy result. The Dow rose 3%, the S&P 500 1.6%, the Nasdaq 1.4%. Gold jumped 3.4%.

Thursday, investors read what the winners were actually saying about artificial intelligence. The S&P 500 fell 4.4%. The Nasdaq fell 5.5% and is now about 12% below last month's high, which the market calls a correction. The main index of chipmakers fell 12%, its worst day since April 2025. AMD lost 17.3%. This morning the selloff reached Asia, with Japan's Nikkei down 6.2% and South Korea's Kospi down 7.1%.

Two days, two opposite verdicts on the same election result.

What Democrats Actually Said About AI

The loudest voices went a long way. Representative Yassamin Ansari of Arizona posted that the agenda from day one should include halting advanced AI development and banning superintelligence, according to reports of her post. Senator Bernie Sanders wrote: "National data center moratorium now." In Texas, governor-elect Hinojosa said: "I will issue a moratorium, a ban, on all data center approvals."

The party leadership was more measured. House leader Hakeem Jeffries spoke of an "AI safety crisis" and said voluntary industry promises were not enough, while Representative Frank Pallone argued against "blanket moratoriums" and Senator Maria Cantwell wants a bipartisan framework.

So "Democrats want to stop AI" overstates it. The accurate version is that the party now holds the power to investigate and legislate, its most vocal wing wants to slow the build-out sharply, and its leadership has not yet decided how far to go.

What Can Actually Happen, and When

Very little before January, when the new Congress sits. After that, a national data centre moratorium needs 60 Senate votes, which means persuading several Republicans, and then a signature from President Trump, who has pushed for faster AI infrastructure. Analyst Shakeel Hashim expects strict rules for the most powerful AI models could still pass in early 2027, because the industry is likely to soften its opposition after this result.

The faster risk sits in the states. A governor's moratorium on new data centre approvals in Texas, one of the biggest data centre markets in the world, does not need Congress at all.

"See You Soon"

Elon Musk spent more than $445 million backing Republican campaigns, according to OpenSecrets, including more than $150 million supporting Paxton in Texas. After the results, he posted: "Guess my election-interfering space lasers didn't work this time."

When Ansari posted her AI agenda, Musk replied: "It's a Brave New World." Ansari answered: "See you soon."

That reply landed because it matches what others are saying more formally. The office of Robert Garcia, the expected new chair of the House Oversight Committee, said: "We definitely have a lot of questions about Elon Musk's role in DOGE, and it is something we plan to investigate." Texas's incoming attorney general says he intends to investigate Musk too.

Investors took it seriously. Tesla fell from about $398 to $381 on Wednesday, and SpaceX from about $142 to $135. SpaceX depends heavily on NASA and Defense Department contracts, and Congress writes those budgets.

The Johannesburg Version

South Africa's own election moved our market in the same week, and in the same direction at first.

The rand gained more than 1% on Wednesday, partly on the US result, then another 0.5% on Thursday to about R16.34 to the dollar as early counts showed the DA doing well. ETM Analytics said markets read the early results as "a potential shift towards investor-friendly coalitions in major economic centres." On Friday, the rand slipped back to about R16.53 as the global AI sell-off pushed money into the dollar.

On provisional counts early on Friday, the DA led the party-list vote in all three big Gauteng metros: about 40.5% in Johannesburg with 41% of voting districts counted, 33.1% in Tshwane with 60% counted, and 29.7% in Ekurhuleni with 59% counted. No party is near an outright majority in any of them, and of the first 100 councils decided, 69 had no outright winner.

That last number is the one investors should hold onto. Leading the vote is not the same as governing. Johannesburg has cycled through several mayors since 2021 because coalitions kept collapsing. As Lisette IJssel de Schepper of the Bureau for Economic Research put it, the key question is whether these elections produce more stable administrations, better service delivery and a stronger environment for business.

Same lesson as Washington. The market has priced the vote. It has not yet seen the government.

Stock Spotlight

Nvidia (NVDA)

If a moratorium on data centres is the fear, Nvidia is where the fear lands first. Its chips are what goes inside those buildings.

What the Market Believes

The AI build-out is still accelerating. The latest results support it. In the quarter to late July, revenue was $96.2 billion, up 106% on a year earlier. Data centre revenue was $89 billion, up 117%. Gross margin was 75%, meaning 75 cents of every sales dollar survived the cost of making the product. Guidance for the current quarter is $108 billion, and that assumes no data centre chip sales to China.

What the Market May Be Missing

How much of that demand depends on permission. Nvidia sells to the giant cloud companies, whose AI spending is forecast to rise from about $800 billion this year to $1.3 trillion next year. That money has to turn into buildings, power connections and planning approvals. A moratorium in Texas does not cancel demand, but it can delay it, and a delayed order is worth less to a share price than an on-time one.

What Actually Matters

The share price has already moved a long way. Nvidia closed at $181.60 on Thursday, down 9.3% in a day, about 25% below its 52-week high of $243.37, and about 3% down for the year. It is still worth about $4.38 trillion. At last week's price, one estimate put it near 13 times expected earnings, which is low for a business growing this fast. The market is not doubting this quarter. It is doubting how many more quarters like it are coming.

What to Watch from Here

The quarterly results on 17 November. Revenue against the $108 billion guidance matters less than what Nvidia says about orders for next year, and whether the big cloud companies repeat their spending plans after this week. Watch also for any Texas data centre approvals being paused once the new governor takes office.

Quick Signals

Three things SA investors should watch this week

• Traders are pricing a Federal Reserve rate hike in December, not a cut. CME's FedWatch tool put the odds near 80% on Thursday. Why it matters: much local commentary assumes global rates fall from here. If the Fed is still tightening, the rand and our bonds lose part of the tailwind they gained this week.
• The new Congress is already writing letters. Senator Elizabeth Warren has written to Anthropic's chief executive about risks the company disclosed in its listing documents, days before it is expected to start marketing its shares. Why it matters: the largest AI listing of the year will now be sold to investors under closer political scrutiny than anyone planned for.
• Oil fell nearly 9% in a single session on Wednesday. It came on hopes that the US result means less escalation in the Iran conflict, and gold rose above $4,100 an ounce. Why it matters: imported fuel drove South African inflation up through September. If oil holds lower, that pressure eases at the pump within a month or two.

AI + Finance

The new constraint on AI is not chips. It is electricity, and voters.

This week voters rejected data centre projects in every ballot measure on the subject except one, according to CNBC. Households have started connecting their power bills to the server farms going up nearby, and politicians have noticed.

South Africans will recognise this immediately, because we have lived the industrial version for 15 years. Eskom's average tariff has risen roughly 172% since 2016, against cumulative inflation of about 60%. We know what happens when the cost of power becomes a political question rather than a technical one: it gets rationed, repriced and argued about for a decade.

The scarce input in artificial intelligence is turning out to be the least glamorous one. Not the model, not even the chip, but the grid connection and the public consent to use it.

A Question to Sit With

When a market gains and loses trillions in two days over promises that cannot become law until next year, is it pricing the future or just the mood?