LONDON, Nov 5: Wall Street and European stocks fell back on Wednesday as investors buckled down for an expected gloomy economic ride after the euphoria of Democrat Barack Obama’s US presidential election victory.

Dealers said gains made on Tuesday on hopes for fresh efforts to tackle the global financial crisis were surrendered quickly on Wall Street and in Europe although Asia did better despite signs of gathering economic problems.

They said the markets realise that little can happen immediately, with Obama due to be sworn in only in late January, and the global economy faces serious headwinds regardless of the political leadership involved.

“The feel-good factor which may have been generated ... from the historic nature of Obama’s victory is unlikely to filter through to financial markets,” said Martin Slaney, head of derivatives at financial spread betting group GFT in London.

“Given the much bigger economic picture there is little chance of a post-election rally,” Slaney said.

“There is an element of ‘buy the rumour, sell the news’ that is driving some profit-taking to kick in,” he added.

On Wall Street, the Dow Jones Industrial Average was down 2.39 per cent at around 1700 GMT.

In Europe, London’s FTSE 100 index of leading shares shed 2.34 per cent at 4,530.73 points. In Paris, the CAC 40 index fell 1.98 per cent to 3,618.11 points and in Frankfurt, the DAX lost 2.11 percent to 5,166.87 points.

In Asian trade earlier, however, Tokyo ended with a gain of 4.46 per cent, Hong Kong jumped 3.2 per cent and Sydney rose 2.9 per cent.

US stocks staged a powerful rally on Tuesday, with the DJIA up 3.28 per cent which gave the Asian markets a good start but this was not carried over into Europe.

Obama faces a global financial crisis and a host of domestic problems in the economy, including rising unemployment, falling home values and slowing exports when he takes office on January 20.

World leaders hailed Obama’s historic triumph but there were also calls for the global superpower to change the way it does business.

European Commission president Jose Manuel Barroso called for the election to usher in a “new deal” between the United States and the rest of the world to tackle the global financial crisis and other troubles.

“Back to the realities of financial world and it seems that the euphoria didn’t last that long with stock markets around the globe peering into what they increasingly believe will be a long and protracted period of global recession,” said Howard Wheeldon, senior strategist at BGC Partners.—AFP