European stock index futures fell as Democrats won control of both chambers of Congress in the US midterms, a potential setback for stocks given the prospect of tighter regulatory scrutiny, particularly of technology and artificial intelligence companies.

Euro Stoxx 50 futures declined 0.52% at 05:42 a.m. in London, trimming losses of as much as 1.5%.

Democrat’s landslide win amounted to a rejection of President Donald Trump following widespread voter discontent with the economy and the war in Iran. Treasuries rallied amid expectations that the new political environment may limit the Trump administration’s tax and spending plans.

European equities have outperformed the US market in the month leading up to the midterms amid a strong rotation out of the artificial intelligence trade and into more defensive sectors. Investors’ main focus will be on the outlook for the Iran war and any policy changes that could impact the tech sector.

There are worries about the earnings outlook for stocks in AI-related sectors as some newly elected candidates have been vocal in their opposition to data centers. However, many investors have been front-running those risks by offloading stocks that stand to benefit most from the AI rollout, with a UBS Group AG basket tracking these names falling 11% last month.

Bank J Safra Sarasin equity strategist Wolf von Rotberg said the immediate reaction to the Democrat landslide victory fed into concerns around the construction of data centers across the US. “Wins in states like Texas could slow the buildout and have a broader impact on AI capex, which could have consequences for the cycle as well,” he said.

He added that Trump conceding defeat of the Republican party certainly removed a key concern that weeks of political turmoil could have followed. “Markets surely see that as relief.”