United States President Barack Obama had little time to
celebrate winning a second term as US markets turned red and
attention turned from the election to looming economic
A relief rally was nowhere in sight as US stocks fell more
than 2% putting the Standard and Poor's 500 on track for its
biggest drop since June.
Energy, healthcare and the banking sectors were among the
hardest hit after Mr Obama defeated Republican Mitt Romney,
whose policy positions favoured those industries. Defence
shares also plunged.
Both the Dow and Standard and Poor's closed at their lowest
levels since August.
Craigs Investment Partners broker Chris Timms said the
markets were concerned about the looming showdown between Mr
Obama and a divided Congress on how to deal with the fiscal
cliff - the $US600 billion ($NZ724 billion) package that
automatically triggers on January 1 if no deal is reached.
The fiscal cliff is a mixture of tax increases and budget
"There is also the issue of a debt ceiling, which needs to be
raised to avoid a government shutdown," he said.
The Republican Party retained control of the House of
Representatives while the Senate remained under Democratic
Mr Timms said the divided government was disappointing
because the same configuration had contributed to an existing
deadlock. The latest result had provided no clear path to a
The transtasman sharemarkets did not follow the lead of US
and European stocks. Mr Timms said the ASX and NZX had
shrugged off much of the negative talk from Europe and the
"The NZX was up slightly as the neverending search for
investment income continues," he said.
Overseas, the market losses were broad with pessimism
exacerbated by overseas concerns after the European
Commission said the region would barely grow next year,
dashing hopes for improvement in the short term.
"There's no question that Europe is lagging the rest of the
developed and emerging world," he said.
Asian stocks opened down on the US and European concerns.
Greece's Parliament narrowly voted to approve an austerity
package to unlock vital aid and avert bankruptcy, despite
internal rifts in both ruling New Democracy and Pasok parties
and violent demonstrations.
"The Greek vote is gone by, the flash Obama panic has forced
... investors to close down their positions to lock in
profits," Societe Generale analyst Sebastien Galy said in a
note to clients.
"We are left with the usual story of flatter US Treasuries
helped by renewed reserve activity."
The European Central Bank was expected to keep interest rates