Dollar slides to a one-month low but global stocks recover after Democrats sweep both houses of Congress in US midterms

Gold rallied 2.73 per cent to $4,305 and sterling climbed 0.51 per cent to $1.3480 against a weakened dollar as investors fled to safe havens after the Democrats' blue wave secured Senate seats in Republican strongholds including Texas, Iowa, North Carolina and South Carolina. The dollar index hit a one-month low while two-year US Treasury yields dropped 3.7 basis points as markets priced in political gridlock for the remainder of Trump's term.

The FTSE 100 defied forecasts of a 0.6 per cent fall, rising 0.2 per cent as commodity stocks led by Fresnillo and Endeavour Mining rallied.

AI regulation fears drove the overnight selloff, with analysts warning Democrat control of Congress could curb data centre expansion and slow the Magnificent 7's earnings growth.

The scale of losses has raised questions about Trump's ability to push through his agenda, with Nasdaq futures later pointing to a 0.2 per cent recovery at the open.