Tech sector faces increased regulations after US Democrat sweep
Silicon Valley and the wider US tech sector faces increased regulation after the Democratic party saw sweeping wins across the mid-term elections.
Early polling on Wednesday morning (4 November) shows that control of Congress will fall to the Democrats as voters signal their discontent with President Trump and his policies as the Iran war has fanned inflation and squeezed household affordability.
Commenting on the results Kit Rees, Investment Strategist at Quilter, noted that Trump was re-elected in 2024 on the promise to get prices down, and today’s result is a rebuke to that broken promise with prices at the pump and on the supermarket shelves remaining stubbornly high.
“Markets were already on edge going into the vote due to concerns over excessive AI spending from hyperscalers and elevated oil prices, making it a particularly febrile backdrop for the midterms. Even as investors await the full results of the vote, US assets are coming under pressure with the dollar and US stock futures sliding as investors reassess the outlook for Trump’s agenda.
“With this set of results though we are entering a period of volatile policy making and potential legislative gridlock, with Trump likely to use his presidential veto regularly,” she said.
Rees noted that technology stocks, in particular though, could feel the heat as a Blue sweep raises worries that the sector is in store for greater regulatory scrutiny, especially when it comes to the buildout of data centres.
“AI has been an enormous engine powering the US economy, so any curbs on its future development could threaten to put the brakes on growth. It also makes it a trickier outlook for the world’s biggest stock market whose fortunes have become increasingly dependent on whether the new technology delivers in terms of returns,” she said.
