New Delhi, Nov. 4 -- A sweeping Democrat win in US midterm elections is the latest curve ball to markets grappling with the repercussions of the Iran war and an AI boom that has bolstered growth and inflation, just as the world's biggest economy's debt load mounts.

While the overall market reaction to the results was modest on Wednesday, with equities higher in Europe and the dollar recovering, investors are bracing for volatility to continue. Attention fell on two areas in particular: the direction of an Iran war that has helped drive oil prices up 70% this year and a contentious debate over US fiscal spending.

"The biggest potential market implications could be if, with the midterms now out of the way, the President (Donald Trump) dec...