A man walks in front of the New York Stock Exchange Nov. 5, 2012 in New York City. (Photo: Mario Tama, Getty Images)
NEW YORK -- Investors reacted to the news of President Obama's
re-election by sending U.S. stock futures lower, then higher and finally
lower across the board Wednesday morning.
With the market set to
open at 9:30 a.m. ET, futures for key stock indexes were sending signals
that stocks would fall modestly when trading begins.
markets, investors seemed not ready to overwhelmingly endorse Obama's
win. In Europe, key indexes in Britain, France and Germany were modestly
higher. In Asia, markets ended the day mixed.
Investors seem to
be looking past the hard-fought Obama win and focusing on the virtual
status quo that remains in Congress, where Republicans retain control,
and the Senate, in which the Democrats have the majority, picking up two
That means averting the so-called "fiscal cliff" looming
in December, when a host of mandated budget cuts and tax cut
expirations, could be just as troublesome as investors had feared before
they knew the outcome of the presidential election. The biggest fear is
that Washington's inability to compromise will amplify economic and
financial woes plaguing the U.S.
The dollar was essentially
unchanged in trading against the euro, probably more a reflection of
ongoing worries about the debt crisis in Europe. Greece faces its
toughest vote yet Wednesday on passing $17.3 billion more in austerity
measures to qualify for more bailout funding or default on millions of
dollars in loans. The dollar did strengthen slightly, 0.3%, against the
Gold prices had been up as much as 2% overnight but the gains
were trimmed to 0.5% by early Wednesday, to $1,727.80, as global
investors puzzled over how the election might affect inflation.
dollar was soft heading into the election, losing ground as investors
considered how the currency would react to the upcoming so-called fiscal
cliff of tax increases and budget cuts. It fell 0.2% to $1.2822 per
euro in late New York trading Tuesday. Meanwhile, the dollar
strengthened vs. the Yen, gaining 0.3%.
The modest change in
global stock indexes didn't surprise investors, who largely anticipated
no major changes in U.S. international policy with Obama returning to
the White House for another four years.
"An Obama victory will
leave less uncertainty for the markets and probably help what's been
better sentiment in Asia recently," said Mark Headley of Matthews Asia
Pacific fund. Had Romney won, it would have meant "more uncertainty for a
world already with lots of uncertainty."
Markets overseas had
already been pricing in and anticipating a win by President Obama as
investors hoped for the continuity, said Jim Welsh, portfolio manager of
the Forward Tactical Enhanced Fund. Foreign investors appreciate the
"stability that a reelection of Obama would provide," he says.