World stock markets rose today after President Barack Obama won a fiercely-contested race for re-election, allowing him to refocus his attention on issues other than the campaign.
Stock markets had been in a state of suspended animation throughout the week as investors waited for the cliffhanger election campaign to end.
With the Republican challenger Mitt Romney defeated, politicians can now turn to the campaign’s most dominant issue: the slowly-recovering US economy.
Among the most pressing matters is dealing with the so-called fiscal cliff – a combination of higher taxes and US government spending cuts that automatically take effect unless Congress acts by January 1. Economists warn that no action will push the economy back into recession.
Congress has so far been unable to find common ground on the tax and spending cuts, and results of the congressional races that were up for grabs point to yet more gridlock.
Democrats retained control of the Senate, while Republicans kept their solid majority in the House of Representatives.
Ric Spooner, chief market analyst at CMC Markets in Sydney, said: “I think stock market investors are likely to remain reasonably cautious before getting an idea of how that is going to be resolved.
“The fiscal cliff will remain a source of concern so I think we’ll see some negative premium built into the US dollar.”
European stocks were higher in early trading. Britain’s FTSE 100 rose 0.3% to 5,899.13. Germany’s DAX rose 0.6% to 7,419.95. France’s CAC-40 rose 0.8% to 3,507.30.
Wall Street headed for a higher opening, with Dow Jones industrial futures up 0.1% to 13,213 and S&P 500 futures adding 0.1% to 1,426.90.
Earlier in Asia, Japan’s Nikkei 225 index, bobbling throughout the session between gains and losses, closed marginally lower at 8,972.89.
Hong Kong’s Hang Seng added 0.7% to 22,099.85. South Korea’s Kospi gained 0.5% to 1,937.55. Australia’s S&P/ASX 200 rose 0.7% to 4,516.50. Benchmarks in Indonesia, Singapore and Taiwan also rose.
Mainland Chinese shares edged lower, with Shanghai Composite Index slipping marginally to 2,105.73. The smaller Shenzhen Composite Index lost 0.2% to 851.64
Federal Reserve chairman Ben Bernanke appears set to hold on to his job too for another term. Mr Romney, who disapproved of Mr Bernanke’s bond-buying programmes to stimulate the US economy, had said he would not reappoint him to another term to lead the Fed.
Francis Lun, managing director of Lyncean Holdings in Hong Kong, said an Obama victory means an extension of the status quo: “Nothing will change. We will have ultra-low interest rates, a one trillion dollar deficit, and quantitative easing.
“Bernanke will keep his job as Fed chairman. As for the fiscal cliff, the president will do something to minimise the effect of tax increases and spending cuts.”
And, he added: “There will be less China-bashing. It’s always for the challenger to bash China, and for the incumbent to defend China policy.”
Investors are also watching developments in Greece, where a political crisis could derail an austerity package that is required for the country to receive its next batch of bailout funds. Without the money, Greece faces the prospect of going bankrupt this month and possibly leaving the euro.
Also on the radar is tomorrow’s opening of China’s Communist Party congress - the once-in-a-decade forum to name China’s top leadership.
Although current vice president Xi Jinping is almost certain to be China’s next leader, markets will be looking for hints on how the new leadership plans to tackle the nation’s economic slowdown.