Stock markets have greeted the re-election of President Bush with strong gains but, by late yesterday, the familiar concerns about rising oil prices and the outlook for growth had resurfaced.
Last night, many on Wall Street and in global bourses forecast that the post-election stock rally would quickly give way to a focus on earnings and the interest rate environment.
"The markets feel they dodged a bullet with the Bush victory," said Mr Tom McManus, chief investment strategist at Bank of America.
At mid-session in the US, the Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite were all up 1.3 per cent, but by the close last night the three markets were up by around 1 per cent as rising oil prices led to some earlier gains being eroded.
Sectors perceived to benefit from a Bush re-election, such as healthcare and energy, recorded particularly big gains but the rally was broad-based.
All the big S&P 500 sectors rose, with advancing stocks outnumbering those in decline by a margin of three to one on the New York Stock Exchange.
The impact of Mr Bush's success on European markets was more muted, although shares did move higher.
The Dublin market also took comfort from the Bush victory yesterday, with the ISEQ gaining almost 1 per cent on news that the US administration would not be changing.
Dealers in Dublin said investors had little concern for the political aspects of the win, but were taking heart instead from the stability it would bring to markets, at least in the short term.
The ISEQ typically takes its lead from larger global markets, with a positive US performance generally reflected in Dublin by the close of the session. "It's down to uncertainty," said one Dublin dealer last night, explaining that investors fear little more than change.
In other asset classes, sentiment was more subdued. The dollar saw its brief momentum subside as investors resumed their focus on economic concerns such as the sustainability of the US current account deficit.
The dollar, after a brief rally, was weaker again last night, with the euro up over $1.28 , compared to $1.266 in overnight Asian trade. "Blink and you missed the rally," said Mr Chris Furness at 4Cast economic consultancy.
The brief rally related mainly to the unwinding of positions taken out before the election, commented Mr Austin Hughes, chief economic at IIB Bank. These related to people protecting their positions in case of a long, drawn-out legal battle and to hedge fund activity, he said.
Oil prices surged more than $1, meanwhile, as the re-election of President Bush countered the impact of a big increase in spare oil supplies ahead of winter.
Crude dealers said Bush's victory could bolster US fuel demand and underscore anxiety over the security of Middle East crude shipments.
US light crude settled up $1.26 to $50.88 a barrel, climbing back over the psychological $50 mark after settling below it for the first time in a month on election day. Brent crude was up $1.01 to $47.56.
A second Bush administration was likely to continue filling US emergency oil stockpiles despite high prices and could stoke nerves about US policy in the Middle East, particularly OPEC's second-biggest producer Iran, analysts said.
