Wall Street and European stocks fall after election rally
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Despite gains in Asia, Wall Street and European stocks fell Wednesday after the election of Barack Obama to the US presidency, as markets looked to the numerous economic challenges ahead.
Wall Street and European stocks fell Wednesday as investors took profits despite gains earlier in Asia as Democrat Barack Obama was elected the first black president of the United States.
In opening deals, New York's Dow Jones Industrial Average dropped 0.91 percent to 9,537.51 points and the tech-heavy Nasdaq fell 1.20 percent to 1,758.67. The Standard & Poor's 500 index shed 0.91 percent to 966.62.
In late afternoon trading in Europe, the London market lost 2.25 percent, Paris shed 2.61 percent and Frankfurt was down 1.28 percent. Milan dipped 0.88 percent and Zurich dived 2.59 percent.
"The feel-good factor which may have been generated on a social basis from the historic nature of Obama's victory is unlikely to filter through to financial markets," said Martin Slaney, head of derivatives at financial spread betting group GFT in London.
"Given the much bigger economic picture there is little chance of a post-election rally," Slaney said.
"There is an element of 'buy the rumour, sell the news' that is driving some profit-taking to kick in."
In Asian trade earlier, however, the Tokyo stock market ended the day with a gain of 4.46 percent, Hong Kong jumped 3.2 percent, Seoul gained 2.4 percent and Sydney rose 2.9 percent.
Shanghai closed up 3.16 percent while Mumbai fell 4.81 percent and Taiwan share prices closed down 0.29 as investors pocketed recent gains.
"The (Seoul) market rose sharply thanks to an overnight Wall Street rally and a continuing buying spree by foreign investors on hopes that the next American leader will act to boost the sluggish US economy," Goodmorning Shinhan Securities Kim Jung-Hyun told Yonhap news agency.
Obama, an African-American Illinois senator campaigning for change after eight years under the Republican administration of President George W. Bush, defeated Republican John McCain to become the 44th US president.
Obama faces a global financial crisis and a host of domestic problems in the economy, including rising unemployment, falling home values and slowing exports when he takes office on January 20.
"While the path of change in our nation's political and social history took an awesome step forward ... the uncertainty over the path of change the new administration will start walking in January is apt to be a limiting factor for the stock market in the near term," said Patrick O'Hare, analyst at Briefing.com.
"Given the state the economy and the capital markets are in, it is hard to fathom a tax hike being pushed through early in the new administration," he said.
US stocks had staged a powerful rally, with the DJIA up 3.28 percent, the Nasdaq adding 3.12 percent and the Standard & Poor's 500 jumping 4.08 percent.
World leaders hailed Obama's historic triumph but there were also calls for the global superpower to change the way it does business.
Celebrations erupted in capitals around the world. A national holiday was declared in Kenya -- where Obama's father was born -- to welcome the first black US president.
European Commission president Jose Manuel Barroso called for the election to usher in a "new deal" between the United States and the rest of the world to tackle the global financial crisis and other troubles.
Investors across Europe were meanwhile gearing up for further cuts to interest rates on Thursday by both the Bank of England and the European Central Bank to give the economy another boost.
Some economists are forecasting the BoE to follow up last month's emergency half-point reduction to 4.50 percent with a cut of one percent this time around given the deterioration in the economic outlook.
Economists expect a cut of half a percentage point to 3.25 percent by the ECB. Late last month, the US Federal Reserve slashed its key lending rate by a half point to match a historic low of 1.0 percent.
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