Analysis: Don't bet your house on the bounce. US shares staged a rally yesterday as news came through of the Bush victory.

But even as the trading day drew towards a close, the gains were being pared back due to fears of higher oil prices. Just a few hours after the result, normal transmission was being resumed.

The immediate rise in share markets yesterday was predictable, once it became clear that Mr Bush was returning to the White House. The big fear of investors had been an uncertain outcome and a legal wrangle.

That the victor was Mr Bush also helped the instant bounce, but more because of a vague uncertainty about the change which a Kerry White House would have brought than for any great enthusiasm for Mr Bush's agenda. Certainly the Republican victory was seen as beneficial to certain sectors - such as defence.

However, in general, Kerry's policies were not "anti-business". Yesterday, the Taoiseach spoke of tax changes proposed by the Democrat which could have affected multinational investment - these were plans to stop companies deferring taxes liabilities by keeping funds overseas. However, the details of the plan and extent to which these would really have disadvantaged investment here were unclear.

Arguably, Mr Kerry's plans to reduce the federal budget deficit were more coherent than those put forward by the winner. Mr Bush wants to make his recent income and capital tax-cuts permanent, arguing that the resultant boost to growth will boost revenues. This may have worked for Charlie McCreevy, but may do little to close the US federal gap, estimated at 3.6 per cent of GDP this year.

The briefness of yesterday's rally in the US dollar - which ended lower - reflected concerns about the even wider deficit on the current account of the US balance of payments. A weaker dollar would help to close the current account gap by boosting exporters - the " benign neglect" by the Bush administration to the currency may continue.

Attention also now returns to fundamentals. The economy bounced in the first quarter, but growth has eased since and the jobs market is lacklustre. Last night, investors' eyes had moved from the election and towards Friday's October employment data.