US stocks surge as oil plunges below $100 on Iran war hopes after Democrats' win

US markets rallied after Democrats' sweeping victory in the midterm elections, as investors became hopeful that the result could push US President Donald Trump towards ending the ongoing war with Iran. The election outcome also raised hopes of lower energy prices and reduced geopolitical tensions.US markets rally as oil prices fall after Democrats' midterm election victory. (Unsplash)Oil prices plunged sharply amid expectations that the Iran war could come to an end. Brent crude futures fell nearly 9% overnight, dropping below $100 per barrel for the first time in two months.Brent crude falls 20% this weekBrent crude has fallen around 20% so far this week. It is now heading towards its biggest weekly decline since April 2020, according to Reuters.The fall in energy prices helped global stock markets and bond prices rise. Lower oil prices eased concerns about inflation, encouraged investors to buy bonds and pushed US bond yields lower.The weaker dollar also supported the broader market rally. The US dollar remained close to a one-month low against the euro as investors reacted to the fall in oil prices and the election outcome.Also read: Trump rules out firing Pete Hegseth after reports of possible replacement following GOP midterm lossesS&P 500 rises 1.6% after Democrats' winInvestors were not entirely surprised by the Democratic victory, although the scale of the win was bigger than expected. Deutsche Bank strategist Jim Reid said the election result was broadly in line with investor expectations, but Democrats performed better than anticipated.Wall Street's major stock indexes closed higher on Wednesday. Investors welcomed the clear election outcome, with the benchmark S&P 500 rising 1.6% by the end of the trading session, Reuters reported.Renewable energy stocks gained after the Democratic victory.Oil prices fall on Iran war hopesOil prices remained under pressure as traders expected Trump to avoid escalating the war with Iran. Investors believe that a Democratic-controlled Congress, combined with growing political pressure over high energy prices, could make the US president less willing to continue the conflict.Crude oil was last trading around $95 per barrel, up 0.8% on Thursday. However, it had already lost nearly 10% over the previous two days, Reuters reported.Trump acknowledged that the Iran war had contributed to the Republican Party's election defeat. The conflict and the resulting increase in energy prices have become major concerns for American voters.Vice President JD Vance also directly blamed the war for the Republican losses. In a post on X, Vance wrote: "The reason we lost is the war."US bond yields fall as prices riseUS government bond prices also increased, pushing bond yields lower. The yield on the benchmark 10-year US Treasury note fell by 2 basis points to 4.87%.Overall, investors reacted positively to the Democratic midterm victory, with hopes that political pressure could push Trump towards reducing tensions with Iran. Falling oil prices supported global equities, bonds and gold.