The US stock market has opened higher, defying expectations of sharp falls, as investors come to terms with Donald Trump’s shock election win.

Donald Trump’s victory speech is being credited with calming the world financial markets as investors took the time to consider what the Republican party’s victory actually means.

The Dow Jones was trading up 0.4 per cent minutes after the opening bell.

Meanwhile, the S&P 500 dropped 0.5 per cent and the Nasdaq slipped 0.8 per cent - well below the expected losses.

Analysts had said earlier that the Dow Jones industrial average and the S&P 500 would open about 1.5 per cent lower, with the Nasdaq off by 1.9 per cent.

This is a remarkably small reaction to one of the most improbable political victories in modern US history.

Kathleen Brooks of trading firm City Index said market reaction is "relatively muted": "The first speech by President elect Trump has had a calming effect on the markets. ”This suggests that a win for President Trump is not yet America’s Brexit moment."

Shares in steel producers, defence firm and pharmaceuticals were leading leading the rally.

Drug giant Pfizer, the maker of Viagra, has jumped by 9.8 per cent, while its rival Merck, the maker of Januvia diabetes pills, leapt by 6 per cent, as fears over a Clinton crackdown on big pharma companies disappeared.

Meanwhile, Britain’s FTSE 100 has recovered from its early selloff up 0.76 per cent at 2.30pm.

Donald Trump's most controversial quotes Show all 14 1 /14 Donald Trump's most controversial quotes Donald Trump's most controversial quotes On Isis: "Some of the candidates, they went in and didn’t know the air conditioner didn’t work and sweated like dogs, and they didn’t know the room was too big because they didn’t have anybody there. How are they going to beat ISIS?" Getty Donald Trump's most controversial quotes On immigration: "I will build a great wall — and nobody builds walls better than me, believe me —and I’ll build them very inexpensively. I will build a great, great wall on our southern border, and I will make Mexico pay for that wall. Mark my words." Reuters Donald Trump's most controversial quotes On Free Trade: "Free trade is terrible. Free trade can be wonderful if you have smart people. But we have stupid people." PAUL J. RICHARDS | AFP | Getty Images Donald Trump's most controversial quotes On Mexicans: "When Mexico sends its people, they’re not sending their best. They’re sending people that have lots of problems. They’re bringing drugs. They’re bringing crime. They’re rapists." Getty Donald Trump's most controversial quotes On China: "I just sold an apartment for $15 million to somebody from China. Am I supposed to dislike them?... I love China. The biggest bank in the world is from China. You know where their United States headquarters is located? In this building, in Trump Tower." Getty Images Donald Trump's most controversial quotes On work: "If you're interested in 'balancing' work and pleasure, stop trying to balance them. Instead make your work more pleasurable." AP Donald Trump's most controversial quotes On success: "What separates the winners from the losers is how a person reacts to each new twist of fate." Donald Trump's most controversial quotes On life: "Everything in life is luck." AFP Donald Trump's most controversial quotes On ambition: "You have to think anyway, so why not think big?" Getty Images Donald Trump's most controversial quotes On his opponents: "Bush is totally in favour of Common Core. I don't see how he can possibly get the nomination. He's weak on immigration. He's in favour of Common Core. How the hell can you vote for this guy? You just can't do it." Reuters Donald Trump's most controversial quotes On Obamacare: "You have to be hit by a tractor, literally, a tractor, to use it, because the deductibles are so high. It's virtually useless. And remember the $5 billion web site?... I have so many web sites, I have them all over the place. I hire people, they do a web site. It costs me $3." Getty Images Donald Trump's most controversial quotes On Barack Obama: "Obama is going to be out playing golf. He might be on one of my courses. I would invite him. I have the best courses in the world. I have one right next to the White House." PA Donald Trump's most controversial quotes On himself: "Love him or hate him, Trump is a man who is certain about what he wants and sets out to get it, no holds barred. Women find his power almost as much of a turn-on as his money." Getty Images Donald Trump's most controversial quotes On America: "The American Dream is dead. But if I get elected president I will bring it back bigger and better and stronger than ever before and we will make America great again." GETTY

Craig Erlam, of OANDA, said that although markets have pared their initial losses, no lessons from Brexit were learned.