President Barack Obama could be forgiven a wry smile this morning, after the opening stage of the process to determine his Republican opponent in November's election failed to produce a clear winner, raising more questions than it answered.

Mitt Romney, the long-term favourite for his party's nomination, won the Iowa Caucus by just eight votes - the narrowest victory ever in a Republican primary - from Rick Santorum, thwarting a spectacular late gamble in the process. Santorum had been a 100.00 chance for Iowa just a few days ago, (and matched at maximum odds of 1000.00 for the Presidency), before trading down to 1.25 as the results came in overnight.

The market remains fairly dismissive of his chances at 10.0, firmly behind Romney at 1.35, but Santorum may well benefit further as other failed candidates leave the race.

Ron Paul, who began the night as favourite, trading down to 1.65, only finished third with 21% but still managed to establish himself as a front-line candidate.

Although only 25 delegates were up for grabs in Iowa, (compared for example to 155 and 172 respectively in Texas and California), this opening contest is always pivotal in terms of building momentum and attracting the donations required to fund a nationwide effort. Nobody doubts that billionaire Romney can achieve the latter, though whether he can claim to have the momentum is quite another matter. Despite four years of campaigning, an enormous cash advantage, greater name recognition and arguably weaker opposition, Romney made no advance on the 25% he earned in Iowa during the 2008 campaign.

On the plus side, early polls and prohibitive 1.16 odds strongly suggest another win in next week's New Hampshire Primary, but serious doubts remain over Romney's appeal to the wider Republican base, which could prove costly as the race progresses and support transfers from withdrawn candidates.

Newt Gingrich, who finished a disappointing fourth despite trading at odds-on for Iowa just a fortnight ago, gave a defiant speech afterwards and will stay in the race. Early polling points to stronger performances in forthcoming states such as South Carolina and Florida.

One-time favourite Rick Perry announced he was going home to consider his options after earning a meagre 10%, which will be widely interpreted as the end of his challenge. Likewise, a poor sixth place for Michelle Bachmann will surely mean she quits the race soon. If and when these trailers quit the race, the central question becomes whether their supporters unite behind a single anti-Romney candidate. Both Santorum and Gingrich will certainly be hoping so.