Well, well, well. Who would’ve thought that starting a war might not be the greatest way to win over voters? That especially when ordinary Americans are the ones feeling the pinch and getting hit where it hurts most, that being their wallets. And now, it looks like Trump is the one paying the political price for his own decisions.

The US midterm election results are delivering a rather profound reality check for Trump, with Democrats riding a blue wave that sees them already take over control of the Senate and closing in on the House. The victories are particularly striking in traditional Republican strongholds, with Democrats flipping Senate seats in Texas, South Carolina, and Ohio.

If you’re unfamiliar with the political signals, here is the simple breakdown.

Trump isn’t losing the presidency today. He will still have two more years left at the helm. However, he will be losing the friendly Congress that helped him push through his agenda for the past two years. And once the Democrats take the House too, the next two years could become a rather frustrating exercise in political gridlock.

So, what exactly went wrong for Trump?

After trying to start a global trade and tariffs war, he was already in a rather unpopular spot. But I’m sure that the real kicker for many is the US-Iran war, and that tipped things over the edge.

Exit polls have shown that most voters believe the US made the wrong decision to attack Iran, while the resulting pressure on energy prices has hardly helped households already struggling with living costs. I mean, voters were already unhappy about the economy and the conflict just added another layer of frustration to that.

As such, what happens in the Middle East now will arguably be the most crucial thing to watch. With Trump already being embarassed back home, will he double down on his aggressive approach and go all guns blazing? Or will Congress be able to call things back and push for a more peaceful transition? That will be the next major thing to watch out for, especially for oil prices and bond yields.

As for Wall Street, the election story is focused elsewhere for now. That being on the growing backlash against AI and data centres.

Opposition to data centre construction emerged as a campaign issue as voters have become more and more concerned about things like electricity costs, infrastructure demands and AI’s broader impact on society.

For tech investors, that raises some rather uncomfortable questions about whether the massive AI infrastructure spending boom might run into greater political resistance. And the timing couldn’t be worse with markets already looking rather nervous in recent weeks, questioning whether the big spending can generate returns to satisfy investor concerns. It’s a bit convoluted but it feels like a damned if you do, damned if you don’t situation now.

Nasdaq futures are down 0.7% currently, after having been lower by more than 2% earlier in the day. The bounce is encouraging but I wouldn’t read too much into it just yet.

Between political uncertainty, AI spending concerns and the possibility of tighter scrutiny on data centre expansion, tech shares remain the obvious pressure point at this juncture.  I’ll keep my eyes on that first but in the grand scheme of things, how things play out with the Iran war is what will be key for broader markets.

This article was written by Justin Low at investinglive.com.