Barack Obama wins US election: business reaction

Barack Obama claimed a second presidential term last night as a progressive coalition of women, minorities and young people came together to return America’s first black president to the White House. We look at the business reaction to the result.

Prime Minister David Cameron :

There's so many things that we need to do. We need to kick start the world economy...

= Billionaire investor George Soros =

He said it will open "the door for more sensible politics", adding:

I'm delighted that President Obama has won. The American electorate has rejected extremist positions.

= Annalisa Piazza , Newedge Strategy: =

Needless to say, markets will be focused on the outcome of the US elections today and economic data out throughout the day will only have a limited impact on market direction. As for the distribution of votes at the Senate and House of Representatives, Republicans should hold the latter whilst Democrats should have the control of the Senate.

After the initial impact on markets (probably positive for risky assets and supportive for the USD), the attention will turn on how the President will deal with fiscal policy and its consequent impact on GDP growth. As for monetary policy, Obama as President for another four years should be a guarantee that Bernanke will be able to maintain its accommodative stance in support of the economy without any obstacles for the next few quarters.

= John J. Hardy, head of FX strategy at Saxo : =

Obama’s re-election means political and Federal Reserve business as usual in the US but also means plenty of uncertainty surrounding the fiscal cliff.

The way Obama and the lame duck Congress tackle the impending fiscal cliff will be of crucial importance for the US economy. Ironically, the worse the fiscal cliff, the better the Dollar will likely do because the US Dollar is so linked to global risk appetite and the threat of a US recession would likely see the USD appreciate.

= Ian Williams , Peel Hunt: =

The vast majority of opinion pollsters appear to have called the result of the US Presidential election correctly and the initial market reaction should be one of relief at the decisive nature of the President’s victory; US stock futures are a modest -0.5pc lower having rallied from earlier losses.

The attention will quickly swing to the potential for compromise over the looming fiscal cliff measures and there are incentives for both parties to reach an agreement to delay the potential negative hit to growth.

= Markus Huber, ETX Capital: =

Giving markets an initial push to the upside is rather typical relief often seen after a long drawn out election campaign like this one, that there is finally certainty who will be at helm of the biggest economy in the world for the next four years. However it will be interesting to see how long the euphoria will actually last , especially as there hasn’t been any shift in power not only what the presidency is concerned but also the Senate and the House of Representative.

Many are having severe doubt if both parties will indeed suddenly start working together in fixing the economy or if there are a further four years ahead where the economy is growing well below their long term average failing to create enough jobs to bring the high unemployment down to more bearable levels.

Also soon the so called fiscal cliff will take centre stage in the US where massive automatic spending cuts and tax increase will come into effect if both parties don’t manage to agree to a compromise, this will certainly give a first taste how the relationship is likely to turn out over the next four years between President Obama and the Republican party.

= Richard Lewis, head of global equities at Fidelity Worldwide Investment : =

On the basis that the US election has resulted in status quo in the White House and in Congress, politicians on both sides should now get on with resolving the issue of the budget deficit reduction. With the balance of power remaining the same, there is no excuse for delay.

We will see some very intense negotiations pre-Christmas around the budget deficit and the negotiating stance of the two parties will start off poles apart. The Republican House of Representatives made it clear that it will block any tax increases while President Obama has intimated that if he cannot get satisfactory movement from the Republicans that he will consider driving over the fiscal cliff.

After a lot of wailing and gnashing of teeth, we are hopeful of a budget agreement along the lines of the Bowles-Simpson proposal which is based on a ratio of 3-1 spending cuts versus tax increases.

The budget issue is very important as we have already seen a very significant slowdown in corporate spending while chief executives wait for a resolution to this issue. Q4 activity levels will be low as a result and this will be exacerbated by the impact of Hurricane Sandy. On the basis that there will be a resolution before the first of January, we can expect a decent bounce-back in both economic activity and confidence early in the new year.

Mike Turner, head of global strategy and asset allocation at Aberdeen Asset Management :

If President Obama endured a tough re-election campaign he has greater challenges ahead. These include the simultaneous expiry of tax breaks with the introduction of tax increases and spending cuts at the end of 2012; the so-called ‘fiscal cliff’. At the same time the President has to promote growth and deal with stubbornly high levels of unemployment.

There are positives with some economic data points picking up and the fact that corporate America is in generally good shape with cash - around $1,700 billion - on the balance sheet. However, for company CEOs to be persuaded to spend this money President Obama needs to show leadership and that the economy is moving in the right direction. The challenge for him here is that Congress is divided with the Republicans holding the House of Representatives and the Democrats the Senate. Just as in his first term President Obama is likely to struggle to implement all his policies.

The global economy needs the US to recover. Despite China's emergence, America remains key to the financial health of economies around the world. Stockmarkets may react positively to President Obama's re-election as it offers continuity (particularly in the Federal Reserve) and reduces uncertainty. However, longer term all eyes will be on whether the President can address the country's debt problems, restore business confidence and provide the seeds for growth. All big challenges.