U.S. midterm results reshape Congress and weigh on technology stocks
Democrats won control of both the House of Representatives and the Senate in the U.S. midterm elections, ending single-party control of Washington and setting up a divided government for the remainder of President Donald Trump’s term. President Trump said he would accept the election results. For markets, the focus turned to how a divided Congress could reshape the policy outlook, from government spending and trade to the future of artificial intelligence (AI) infrastructure, as voters in several states backed restrictions on new data center development.
Why this matters: Markets initially rallied following the results, as the outcome removed election-related uncertainty and a divided government was seen as limiting the risk of sharp policy shifts, with lower oil prices and Treasury yields adding support. That optimism faded as concerns over potential limits on data center development and broader AI regulation weighed on technology stocks, with chipmakers and AI infrastructure companies among the hardest hit. The technology-heavy Nasdaq Composite Index fell about 5% in a single day, its steepest decline since April 2025, before partially recovering to end the week.
Canadian job losses continue as unemployment rises to a six-month high
Canada’s labour market weakened further in October, with the economy losing 4,700 jobs, falling short of expectations for a modest gain, following a decline of 68,300 in September. The unemployment rate rose to 6.7% from 6.5%, its highest level since April. Losses were concentrated in full-time and private-sector positions, led by wholesale and retail trade, while construction added jobs. Wage growth also slowed, with average hourly wages for permanent employees rising 2.0% from a year earlier, down from 2.3% in September.
Why this matters: The report points to continued softness in the labour market, which has been linked to trade tensions with the U.S. and cost-cutting by businesses. It also comes shortly after the Bank of Canada (BoC) raised interest rates to address elevated inflation, highlighting the challenge of balancing price pressures against a weakening economy. The BoC’s Summary of Deliberations, due out this week, may offer further insight into the central bank’s thinking ahead of its December 9 decision.
| Index† | Change (%) | Index Level | |||
|---|---|---|---|---|---|
| Week | MTD | YTD | 1 Yr | ||
| Treasury Bill | 0.05 | 0.05 | 1.91 | 2.25 | 195 |
| Canadian Bonds | 0.99 | 0.99 | 1.68 | 0.45 | 1,220 |
| Canadian Equities | 0.48 | 0.48 | 14.96 | 22.56 | 35,789 |
| U.S. Equities | -2.67 | -2.67 | 8.77 | 11.03 | 7,377 |
| International Equities | -1.84 | -1.84 | 8.09 | 12.55 | 3,043 |
| Emerging Market Equities | -4.08 | -4.08 | 9.12 | 10.35 | 1,502 |
| European Equities | 0.27 | 0.27 | 12.97 | 17.77 | 217 |
| Currencies† | Change (%) | Exchange rate | |||
|---|---|---|---|---|---|
| Week | MTD | YTD | 1 Yr | ||
| C$/US | -1.09 | -1.09 | -2.85 | -0.07 | 0.71 |
| C$/Euro | -0.97 | -0.97 | 2.39 | 3.52 | 0.64 |
| C$/Pound | -0.80 | -0.80 | -1.98 | -1.71 | 0.53 |
| Commodities (US$)† | Change (%) | Price | |||
|---|---|---|---|---|---|
| Week | MTD | YTD | 1 Yr | ||
| WTI Crude Oil ($/Barrel) | -12.76 | -12.76 | 59.57 | 52.68 | 91 |
| Gold ($/oz) | 4.51 | 4.51 | -9.39 | -2.30 | 4,075 |
Treasury Bill is represented by the FTSE Canada 60 Day T-Bill Index (C$), Canadian Bonds represented by the FTSE Canada Universe Bond Index (C$), Canadian Equities represented by the S&P/TSX Composite TR Index (C$), U.S. Equities represented by the S&P 500 TR Index (US$), International Equities represented by the MSCI EAFE GR Index (US$), Emerging Market Equities represented by the MSCI EM GR Index (US$), European Equities represented by the MSCI Europe Index (€). It is not possible to invest directly in an index. Assumes reinvestment of all income and no transaction costs or taxes.
This document has been prepared by Scotia Global Asset Management and is provided for information purposes only. Views expressed regarding a particular investment, economy, industry or market sector should not be considered an indication of trading intent of any of the mutual funds managed by Scotia Global Asset Management. These views are not to be relied upon as investment advice nor should they be considered a recommendation to buy or sell. These views are subject to change at any time based upon markets and other conditions, and we disclaim any responsibility to update such views. Information contained in this document, including information relating to interest rates, market conditions, tax rules, and other investment factors are subject to change without notice and Scotia Global Asset Management is not responsible to update this information. To the extent this document contains information or data obtained from third party sources, it is believed to be accurate and reliable as of the date of publication, but Scotia Global Asset Management does not guarantee its accuracy or reliability. Nothing in this document is or should be relied upon as a promise or representation as to the future. Investors should consult their own professional advisor for specific investment advice tailored to their needs when planning to implement an investment strategy to ensure that individual circumstances are considered properly and action is taken based on the latest available information. Scotiabank® includes The Bank of Nova Scotia and its subsidiaries and affiliates, including 1832 Asset Management L.P. and Scotia Securities Inc. Scotia Global Asset Management® is a business name used by 1832 Asset Management L.P., a limited partnership, the general partner of which is wholly owned by Scotiabank. ®Registered trademarks of The Bank of Nova Scotia, used under licence. ©Copyright 2026 The Bank of Nova Scotia. All rights reserved.
