US markets soar after Bush wins battle for White House

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America's stock markets rallied yesterday as Wall Street gave a cheer that, after a closely fought struggle, the 2004 US presidential election resulted in a prompt victory for the business-friendly Republican incumbent, George Bush.

The Dow Jones, the Standard & Poor's 500 and the Nasdaq rose about 1 per cent US on relief that there would not be a repeat of 2000, when the election result was not known for 36 days, with the Republicans and Democrats contesting the vote all the way to the Supreme Court. Margo Vignola, at the brokerage Fox-Pitt, Kelton, said: "Uncertainty is the biggest issue which affects investors' psyche and there was an enormous amount surrounding this election. There has been no major incident, so people are breathing a sigh of relief."

While the rise in share prices was chiefly due to the swift conclusion of the election, most of corporate America also favours a Republican administration over a Democratic one.

The pharmaceutical giant Pfizer and other drug companies on both sides of the Atlantic saw their shares rise, reflecting the difference between Mr Bush's policies and those of John Kerry, who had planned to cap the amount Americans pay for prescription drugs. The defence and aerospace sectors also gained on confidence that military spending would continue to be a priority in a second Bush term, but a rise in oil price held other sectors in check.

While the battle for the White House was close, Wall Street had largely priced in to shares a Republican victory. At least part of the rise in share prices yesterday reflected the strong advances the Republicans made in the Senate elections also held on Tuesday, analysts said.

Top of Mr Bush's tasks will be to deal with America's $422bn (£229bn) deficit, which he has pledged to halve in the next four years. He is also set to introduce legislation to make his tax-cutting programme permanent.