THE glow from Barack Obama's re-election as US president was fading already this evening as markets tumbled just hours after he declared victory.
The fall in market fortunes came as analysts looked ahead to the so-called US fiscal cliff, and new figures raised fresh concerns over the health of the European economy.
Striking a conciliatory tone in his acceptance speech in the early hours of this morning before thousands of cheering supporters in Chicago, he said Americans had “voted for action, not politics as usual".
"I have always believed that hope is that stubborn thing inside us that insists, despite all the evidence to the contrary, that something better awaits us so long as we have the courage to keep reaching, to keep working, to keep fighting," he said.
Despite a stiff challenge by Republican Mitt Romney, who campaigned in swing states even on polling day, the president secured a comfortable win of 303 to 206 Electoral College votes, with only the state of Florida still to be declared.
But Mr Obama's majority in the popular vote was just one per cent, and in their other choices on yesterday’s ballot, Americans preserved the divided government that has made major legislation so difficult to pass for the past two years.
Initially, the markets bounced on Mr Obama's win, but by this afternoon the gains had been reversed. The Dow Jones Industrial Average tumbled 1.8pc and the S&P 500 dropped 1.6pc this afternoon. The FTSE 100 is down 1.3 pc, while French, Spanish, Italian and German have all fallen.
Mr Romney was seen by some financial analysts as the more business-friendly candidate, while Douglas McWilliams, the head of the Centre for Economic Business Research, told Sky News before the election that the Dow Jones Industrial Average could spike by 500 points because his victory had not been priced in by the markets.
Now the election has been decided, analysts are also looking ahead to the challenges posed by negotiations over the fiscal cliff, a collection of tax rises and spending cuts that are due to be implemented in the new year.
"The American people want solutions - and tonight, they've responded by renewing our majority," he said.
But he gave no hint of practical compromise, saying that by keeping Republicans in control of the House, voters had made it clear there was no mandate for raising taxes. Mr Obama has proposed imposing higher taxes on households earning more than $250,000 a year.
Mr Boehner and Mr Obama will be the key figures in talks to resist the so-called “fiscal cliff”, in which tax rises and budget cuts would automatically be triggered on January if an agreement to reduce the ever-growing deficit cannot be reached by negotiation.
The president struck an optimistic tone in his acceptance speech, predicting that “economic recovery was on its way and ten years of war is coming to an end”.
Mr Romney, 65, deflated and exhausted, offered a dignified tribute to the winner, as he consoled dejected supporters in Boston moments after phoning Obama to formally concede.
"This is a time of great challenges for America and I pray that the president will be successful in guiding our nation." He said.
Mr Obama’s victory was built on the same coalition of women, young people minorities and the well-educated that secured his first term in 2008.
They were persuaded to support him again by probably the most sophisticated campaign and get-out-the-vote operation ever seen.
Having made history as the first black president, Mr Obama's second also bucked precedent, as he won with the unemployment rate at 7.9 percent, the highest level for a re-elected president in more than 70 years.
His victory means that he will get the chance to embed his healthcare and Wall Street reforms into the fabric of American life – Mr Romney had pledged one of his first acts would be the repeal of “Obamacare”.
The president may also get the chance to reshape the Supreme Court in his liberal image for a generation, a move that would shape policy on issues like abortion and gay rights.
Although the counts continued late into the night, Mr Obama claimed victory at 4.20am UK time as projections showed he had won the key battleground state of Ohio which both sides knew held the key to amassing the 270 electoral college votes needed to win.
'This happened because of you. Thank you’ Mr Obama tweeted from his personal account. Within minutes, the tweet had become the most popular post in Twitter's history. A similar Facebook update was "liked" more than a million times in the first hour after it was posted.
During his speech, Mr Obama said he had congratulated Republican rival Mitt Romney on the campaign, and hoped to meet with the former Massachusetts governor to discuss ways to "move this country forward".
Despite a close race, Mr Obama’s bullish eve-of-election prediction that he had “got enough votes to win” proved to be accurate as the Democrat turnout machine ensured huge showing from Hispanic and African-American voters.
All US television networks called the vote for Mr Obama and there were jubilant scenes outside Mr Obama’s election headquarters in Chicago, as a young, ethnically diverse crowd screamed their approval at the news.
However there were reports that Repubicans were intending to contest the result in Ohio, even though Mr Obama had appeared to have won a sufficient number of battleground states to ensure victory.
Just twenty minutes after the last polls closed in California, Mr Romney’s supporters in Boston were forced to digest the certain news of their candidate’s defeat, as it became clear that there were no routes left to a Republican victory.
"This is a time of great challenges for America and I pray that the president will be successful in guiding our nation," Mr Romney told supporters in Boston as he conceded defeat.
"I so wish, I so wish, that I had been able to fulfill your hopes to lead the country in a different direction, but the nation chose another leader," Mr Romney said in a gracious speech, during which he appeared to have tears in his eyes.
World leaders rushed to wish Mr Obama well as the results of the poll became clear. Prime Minister David Cameron warmly congratulated "my friend Barack Obama" and pledged to work with the US leader to "kick start the world economy".
Israeli prime minister Benjamin Netanyahu sent his congratulations, as did China's leaders. A flood of European leaders reached out to the president and the news was greeted with jubilation in Africa.
In Ohio, it appeared as if Mr Obama’s decision to use government money to rescue the American car industry had paid a massive electoral dividend, with exit polls showing six out of ten voters had considered the bailout significant.
Huge turnouts in the north suburbs around Cleveland, where as many as one-in-eight workers depended on the auto industry for the jobs, were identified as a key engine of Mr Obama’s support in a state that was saturated with advertising from both campaigns.
No post-war US president has been re-elected with an unemployment rate of more than 7.4 per cent. Today it stands half a percentage point higher but with the improvements to the jobless numbers over the past two years, Mr Obama avoided the fate to avoid following several European leaders who were tipped out office as a result of the 2008 financial crisis.
Mr Romney also appeared to have suffered badly among women voters in light of his support for the Republican party’s extreme opposition to abortion rights and public subsidy of contraception.
CNN’s exit poll found that women made up 56 per cent of the electorate and favoured Mr Obama by 12 percentage points. By contrast Mr Romney won men by seven points, according to the exit poll.
Women were a force to be reckoned with in the election in their own right also. More women than ever before were elected to the US Senate (19), and New Hampshire elected America's first all-female delegation.
Two Republicans criticised for saying that victims of “legitimate rape” could not become pregnant, and that pregnancies from rape were part of “God’s plan”, lost competitive races for seats in the Senate, which were crucial to the party’s hopes of limiting Mr Obama’s power.
Voters also backed legalising marijuana for recreational use, allowing gay marriage and rejected a call to ban public funding for abortions in state ballots, swerving America down a more liberal path than previously.
The President also appeared to have been boosted both by the racial composition of the electorate continuing to resemble that of 2008, when minority voters were crucial to Mr Obama’s support base.
According to exit polls, he beat Mr Romney by 40 percentage points among Latinos, who made up 10 per cent of the total vote. This was an even better performance than four years ago, when Hispanic voters represented a slightly smaller proportion of the electorate.
Throughout the campaign moderate Republicans warned that Mr Romney’s tough stance on immigration - including a remark in the primary campaign that immigrants should 'self deport’ - would be hugely damaging with the Latino vote.
Mr Obama’s advantage among black voters dipped slightly to 87 points, but the proportion of black voters held steady. Mr Romney won white voters, who made up 73 per cent of the total vote, by 18 points.
The figures indicated that Republican claims of a collapse in Mr Obama’s multi-racial coalition - which they said had in turn skewed opinion polls in his favour - had not been correct.
Even in In Florida, with 90 per cent of the vote counted, Mr Obama held a 1 per cent lead but with many of his own strongholds, including Miami-Dade still remaining to be fully counted, he appeared on course for defeat there too.
Earlier in the day Mr Obama had expressed confidence in victory: “We feel confident we’ve got the votes to win, that it’s going to depend ultimately on whether those votes turn out,” Mr Obama said earlier before the polls closed.
Speaking in his home city of Chicago, he added: “I’m looking forward to the results. And I expect that we’ll have a good night.”
Trying to strike a bipartisan tone to a sharply divided nation, Mr Obama congratulated his Republican challenger for a “spirited campaign”.
He urged all Americans to make their way to polling stations to “make sure that you exercise this precious right that you have … that people fought so hard for, for us to have”.
Mr Romney returned the compliment, praising Mr Obama while visiting a campaign office near Pittsburgh. But he repeated his conviction that it was time for a “better tomorrow”.
“This president has run a really strong campaign. I believe he’s a good man and wish him well and his family well,” he said. “He’s a good father and has been a good example of a good father. But it’s time for a new direction.” The voters did not agree.
Aided by good weather, long queues had formed at polling stations in Florida and Virginia, where some waited for several hours to cast their ballots.
It suggested that enthusiasm was comparable to the 2008 election, when turnout reached its highest point since 1968.
Some cast ballots by torchlight as election organisers made every effort to allow those affected by Superstorm Sandy to vote.
Both campaigns had marshalled teams of lawyers to dispute votes that went to a recount, fearing a late surge by Mr Romney might leave no clear winner, but in the end they were not necessary.
Alex Spillius, Telegraph.co.uk