Share prices have risen in both London and New York after investors shrugged off initial concerns about the knife-edge US presidential election and saw the positive side of a result that could mean Democrats and Republicans sharing power in Washington. UK markets had a sharp fall in early trading as it emerged that neither Donald Trump nor Joe Biden could legitimately claim overnight victory in the race for the White House, but later rallied strongly. The FTSE 100 closed 1.7% higher at 5,883 points, a gain of 96 on the day. Pharmaceutical and technology shares were strong performers. In early trading in New York, the Dow Jones industrial average, the S&P 500 and the Nasdaq posted sizeable gains, ending the day with the Dow up 1.3%, the S&P up 2.2% and the Nasdaq up 3.8%. Before Tuesday’s election share prices had rallied amid optimism that a Democratic “blue wave” would sweep Biden to victory and give the party control of both houses of Congress, thus paving the way for a massive new stimulus package early next year. Those hopes faded as it emerged that Trump had performed better than the opinion polls had predicted and amid signs the Republicans were unlikely to suffer a Senate bloodbath. But Wall Street took comfort from the thought that even if Biden did become president he would have trouble getting his plans for corporate tax increases and tougher curbs on the US tech giants through a divided Congress. Rupert Harrison, a former chief economic adviser to George Osborne and now at investment management firm BlackRock, said the US could face at least two years of gridlock and obstructionism, dependent on its central bank, the Federal Reserve, to support activity. “No big legislation. No big fiscal support for the economy.” Harrison said in a tweet. “The Fed is back to being the only game in town.” Stéphane Monier, the chief investment officer at the private bank Lombard Odier, said: “It very much looks that whoever wins the White House, we face a divided Congress. This has far-reaching implications for markets, mostly because it means that any kind of pandemic recovery package is still tough to approve.”