Europe midday: Stocks rally after US election results, oil prices ease

(Sharecast News) - European stocks posted big gains on Wednesday after the momentous US mid-term election results the previous evening, with investors seemingly shrugging off data showing eurozone inflation jumped to a three-year high as oil prices fell again.

The Stoxx 600 index was 1.5% higher at 655.06 by the lunchtime period, its highest since 28 August, with every major index across the region rallying. Stocks in Milan and Madrid in particular outperformed, with the FTSE MIB and IBEX 35 up 2.3% and 2.9%, respectively.

US stock futures were pointing to a strong start on Wall Street as investors reacted to the Democratic Party's landslide victory in the mid-term elections, with all three of New York's benchmark indices rising at least 1% in pre-market trade.

With the Democrats now in control of both the House and the Senate, many anticipate greater constraints on Donald Trump's legislative and foreign policy agendas, particularly given how the Iran war and higher fuel prices factored into voting across the country.

Oil prices were near their lowest level in a month on Wednesday as investors grappled with how the mid-term election results may impact diplomatic efforts between Washington and Tehran. With the new Congress not taking office until January, geopolitical uncertainty between the US and Iran is likely to remain elevated for the remaining two months of 2026.

Front-month Brent crude futures were down 1.4% at $102.19 a barrel, having now dropped more than 11% over the past week alone.

Back in Europe, rate-hike expectations rose on Wednesday after Eurostat data showed that eurozone inflation hit a three-year high in October amid rising energy costs. The annual rate of consumer price inflation increased to 4% from 3.8% in September, marking the highest inflation rate since September 2023 and above expectations of 3.9%.

Energy inflation rose to 20.8% in October from 18.9% the month before, while services inflation was 3.3%, up from 3.2%. Food, alcohol and tobacco inflation rose to 1.6% from 1.3%.

In equity movements, renewable energy stocks across Europe were in demand on increased hopes that US energy policy may turn back in their favour given the Republicans' overnight defeat. Vestas, Ørsted and Nordex were all putting in a solid performance.

Novo Nordisk rallied after the Danish drug maker lifted its full-year guidance, pointing to continued momentum in GLP1s. The company now expects 2026 adjusted sales and operating profit to decline by 2% at constant exchange rates in a worst-case scenario, or rise by 2% in a best-case scenario, having previously guided to a drop of as much as 6% for both.

On the downside, defence stocks were under the cosh amid expectations the outcome of the US mid-terms would lead to lower spending on defence. BAE Systems, Babcock and Germany's Rheinmetall all slumped.