What a welcome for a US president! Still, while the 2.2 per cent drop in the S&P 500 by early-afternoon yesterday may have damped Democrat euphoria at Barack Obama’s victory a little, he is at least used to it. The day after he was elected in 2008, shares fell more than 5 per cent (the worst post-election market since the second world war).

This time, as last time, he should not be disheartened. The market is single minded in its pursuit of the next big thing; it has now switched from a focus on the election to a focus on the fiscal cliff. Jens Nordvig at Nomura points out that Congress is even more polarised after the election, as more moderates were driven out, and puts a 50-50 chance of US politicians failing to stop January’s automatic spending cuts and tax rises.

Yesterday’s drop pushed the S&P 500 below 1,400 for the first time in two months, as it broke below the range it has been in since early August. But bond yields and European shares remain rangebound, suggesting either further drops in both or that US equities overreacted early on.