Obama wins second term, challenges await

A divided congress

Democrats kept control of the 100-member Senate, seizing Republican-held seats in Massachusetts and Indiana while keeping most of those they already had, including in Virginia and Missouri.

Republicans remained in control of the 435-member House, ensuring Congress still faces a deep partisan divide as it turns to the year-end "fiscal cliff" and other issues.

"That means the same dynamic. That means the same people who couldn't figure out how to cut deals for the past three years," said Ethan Siegel, an analyst who tracks Washington politics for institutional investors.

While the Senate result was no surprise, Republicans had given themselves an even chance of winning a majority, so the night represented a disappointment for them and was in part the self-inflicted result of internal battles.

US stock futures slipped, the dollar fell and benchmark Treasuries rose after Obama's victory, which investors took to mean no dramatic shift in US economic policy.

Markets had generally expected Obama to win, with the general view that a victory for the Democrat would favor bonds, as he is perceived to favor low interest.