A look at the day ahead in U.S. and global markets from Mike Dolan.Tuesday’s U.S. mid-term elections held world markets in thrall and investors now assume policy gridlock will emerge as the winner.While it could be days before all the U.S. election results are known, global stock markets seem priced for a Republican sweep of both the House of Representatives and the Senate. Major bourses in Asia and Europe as well as U.S. stock futures were steady as in-person balloting was due to get underway.The positive market tilt on the most likely outcome assumes the resulting freeze on President Joe Biden’s legislative agenda for the next two years will remove fiscal spending risks to the inflation picture at the margin – allowing the Federal Reserve to end credit tightening at some stage next year.By definition, a surprise Democrat showing may lead to a reversal of some of those bets and elicit the biggest price reaction. What’s more, tensions around the election process and former President Donald Trump‘s expected pitch next week to run for the White House in 2024 will be watched closely.While stocks stayed calm, U.S. bond yields and the dollar crept higher and 10-year Treasury yields nudging their highest in a couple of weeks.With a critical U.S. inflation reading due on Thursday, there was some attention on San Francisco Fed research showing credit across the economy is tighter than the Fed’s policy rate suggests and financial conditions by September were more reflective of a 5.25% policy rate than the current 3.75%-4%.While the major markets largely treaded water, there was a fresh quake in the world of cryptocurrencies. FTX token , the native token of crypto exchange FTX, plunged 20% amid a range of reports and speculation that dragged the whole crypto complex lower and saw drop 5%.FTX has come under pressure after the head of rival exchange Binance said on Sunday his firm would liquidate its holdings of the FTX token due to unspecified “recent revelations”. FTX founder Sam Bankman-Fried said the exchange was “fine” and that concerns were “false rumours”. The firm had no immediate comment when contacted by Reuters on Tuesday.China stocks also underperformed wider markets as speculation over the past week about possible easing of strict COVID-19 curbs as soon as next month seemed to ebb again. New coronavirus cases surged in global manufacturing hub Guangzhou and other Chinese cities and nationwide infections hit their highest level since May 1.In Europe, European Central Bank hawks were out in force and talking up further interest rate rises. ECB officials also said on Monday they were carefully scrutinising euro zone banks’ payout plans as the outlook for the bloc’s economy sours and markets wobble.Shares in Persimmon (PSN.L), Britain’s second-largest housebuilder, dropped more than 7% after it warned on 2023 profit margins as UK house prices deteriorated and its sales rate slipped.Japan said its foreign reserves fell for a third consecutive month to $1.19 trillion, with the decline of $43.5 billion marking the second sharpest month-on-month on record as the Bank of Japan sold dollars to prop up the weakening yen.Key developments that may provide direction to U.S. markets later on Tuesday:* U.S. mid-term Congressional elections* U.S. Treasury auctions 3-year notes* U.S. Corporate Earnings: News Corp, Occidental Petroleum etcReuters GraphicsFTX token’s plunge drags crypto back downFed’ balance sheetReuters GraphicsBy Mike Dolan, editing by Gareth Jones <a href=”mailto:firstname.lastname@example.org” target=”_blank”>email@example.com</a>. Twitter: @reutersMikeDOur Standards: The Thomson Reuters Trust Principles.Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.