After months and billions of dollars spent campaigning, election day has arrived. Many investors are hoping the result will be clear enough to avoid a re-run of 2000 when the outcome was only known weeks later after a protracted recount in Florida and a Supreme Court decision.
"That is a situation global markets fear most," said Cameron Peacock, market analyst at IG. "The best possible outcome would be for a clear and unqualified victor to emerge."
A decisive outcome, it is hoped, will pave the way for a swift budget agreement between the different arms of the U.S. government, thereby averting the "fiscal cliff" — an automatic increase in taxes and spending cuts that could be imposed at the start of 2013.
Even better for markets would be if the same party won control of both houses of Congress as well as the White House, but polls say that is extremely unlikely. The Republicans are tipped to hold onto the House of Representatives and the Democrats their majority in the Senate.
Results will not start emerging until after Wall Street's close, but investors already appear to be pricing in the prospect of a victory for Obama, who has moved slightly ahead in a raft of national polls over the past few days.
In Europe, Germany's DAX was up 0.6 percent at 7,368 while the CAC-40 in France rose the same rate to 3,471. The FTSE 100 index of leading British shares was up 0.7 percent at 5,878.
In the U.S., the Dow Jones industrial average was up 0.5 percent at 13,179, while the broader S&P 500 index rose 0.3 percent to 1,421.
Whoever wins, the honeymoon is likely to be short-lived given the rising debt problems the world's largest economy faces.
Budget discussions will likely remain one of the main drivers in markets for the next few weeks. If no agreement can be found, the country faces a "fiscal cliff" of higher taxes and deep automatic cuts in military and domestic spending by the start of next year — an event that would put the brakes on any recovery in the world's largest economy.
Past negotiations, thanks to the polarized political atmosphere in Washington, have usually gone to the wire. If Romney does win, he won't enter the White House until January. However, he would still have great influence in the discussions as President-elect.
Alex Koustas, an analyst at BMO Capital Markets, said resolving the debt issues won't be easy and "will likely entail navigating a plan through a divided congress that will incorporate all of the touchy subjects: tax reform, benefit reform, military spending."
While the focus in the markets remains on the U.S., investors will continue to monitor developments in Greece amid concerns that a political crisis may end up derailing an austerity package that is required for the country to receive its next batch of bailout funds. Without the money, Greece faces the prospect of going bankrupt this month and possibly leaving the euro.
Worries over Greece have stalked the euro the past few trading sessions, but the currency was holding steady at $1.28 through mid-afternoon trading in London.
Investors are also monitoring developments in China ahead of Thursday's opening of the Communist Party congress — the once-in-a-decade forum to name China's top leadership. Although current Vice President Xi Jinping is almost certain to be China's next leader, markets will be looking for hints on how the new leadership plans to tackle the economic slowdown.
Shares in China closed lower, with the Shanghai Composite Index down 0.4 percent to 2,106 and the Shenzhen Composite Index 0.6 percent lower at 853.33.
Elsewhere in Asia, Japan's Nikkei 225 index fell 0.4 percent to close at 8,975.15. Hong Kong's Hang Seng lost 0.3 percent to 21,944.43.
Oil prices tracked equities higher, with benchmark crude for December delivery up 51 cents at $86.16 per barrel in electronic trading on the New York Mercantile Exchange.