The Hindu Business Line : Relief over decisive US poll verdict

THERE is undoubtedly a huge sigh of relief in America that this Presidential election of 2004 came to an end on Wednesday morning even if the first indications were that of a continuing slugfest in the state of Ohio for its 20 electoral college votes.

If the democratic challenger, Senator John Kerry, had come to the conclusion that he simply could not make it in Ohio, he was professional enough to formally admit it. "We cannot win this election" was as blunt as he could get.

But the morning concession from the Massachusetts Senator in a telephone call to the President, Mr George W. Bush, did make an impact for stocks rallied. Analysts make the point that the markets would have rallied anyway seeing a Bush win, but the fact that the country was spared of an agonising legal drama only helped matters. There was no question of the fact that Wall Street welcomed the second Bush administration that would be in place for more years.

At the end of the day the Dow Jones Industrial Average was up a little over 101 points; and the Nasdaq added 19.54 points to close at 2004.33. In particular the shares of energy, drug and defence companies rose as a result of a perception that policies under the second Bush administration would be favourable to these sectors.

There is also a feeling that the first reaction on Wall Street to the Presidential election is not going to be on a sustained basis. "I doubt beyond today that we are going to see much of a Presidential election effect," Mr Laurence Kantor, Chief Economist and Head of Market Strategy at Barclays Capital, has been quoted in The Washington Post. "After reports of what a mess this could have been, with both sides hiring armies of lawyers, this was more a one day knee jerk reaction..," he added.

One of the major focus of attention in the second Bush administration will be on deficit reduction which many point out will have a real impact on the markets. In spite of all the strategies and numbers thrown around during the course of the campaign trail the impression has been that neither Mr Bush nor Mr Kerry had any concrete plan to come to terms with tackling deficits.

Mr Bush gets into a second term on much stronger basis on Capitol Hill for the simple reason that the Grand Old Party has come out with resounding wins in the House of Representatives and in the Senate. Many see this as an opportunity for the Republican administration to do something really substantial over the next four years. But for this to take place the White House must quickly signal to Democrats that it is looking for partnership and a consensus on a variety of issues, economic and political.

Analysts are saying that the first reactions of Mr Kerry and Mr Bush to the November 2 election has been along the right lines. If the Massachusetts Senator remarked, " I hope that we can begin the healing," the President in his address talked of the "new opportunity" to reach out to the nation.