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[MARKET ANALYSIS] Democrats look set to take complete control of Congress; Health Care and Utilities benefiting while Defence names hit; Novo lifts FY guidance

Newsquawk Staff ·

  • European bourses (Stoxx 600 +0.7%) start Wednesday’s session entirely in the green, with focus being on the US midterms overnight. Before turning to the midterms, the earnings picture was quite busy in Europe.
  • Starting with Novo, the drugmaker lifted its sales and profit guidance for the FY to growth of as much as 2%, from a prior forecast of a decline of as much as 6%, helped by optimism over its Wegovy pill. For its new pill, sales beat analyst estimates, with Novo highlighting that it should be available in over 20 markets in 2027. As a result, shares are higher by 4%. Other earnings stories include: Pandora +7.7%, lifted FY26 revenue and operating margin guidance; Continental +6.5%, Q3 sales came in line while it raised its guidance for continuing operations; BMW +1.5%, Q3 revenue matched expectations while it cut its FY26 guidance.
  • Turning to US equity futures, the ES was down as much as 1.4% overnight but has since reversed, with all futures benchmarks in the green heading into pre-market trade. Very brief pressure was seen at the start of pre-market, but that has since reversed.
  • It was an eventful night for US politics, as the Democrats look set to win control of the House and Senate. The initial reaction was negative for US equities, over concerns that Democratic legislation would apply greater regulatory scrutiny to high-growth businesses, most notably companies key to the AI buildout. Big-tech names initially sold off, with the Nikkei 225 falling over 3%. However, some reprieve was seen after the Republicans won Louisiana PSC Districts 1 and 5 and US President Trump expressed plans to work with the Democrats.
  • Other key spaces to watch are Health Care, Energy and Defence. For Health Care, less cuts to Medicaid are now expected with a possible restoration of ACA subsidies. As a result, UNH and HCA are firmer pre-market (+2.4% and +1.4% respectively). Turning to Energy and Utilities, there is particular focus on Texas, as the Democratic win puts ERCOT power deregulation at risk. FSLR is higher by 8.5% pre-market, with European peers also firmer (Orsted +7.6%, Vestas +3.9%). Finally, the prospect of trimmed funding for defence will provide a headwind for US defence names, with LMT lower by 0.6% pre-market, while BAE Systems is slumping over 5% given its high exposure to the US.

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