Markets plunge after Greece and France election results
Monday 07 May 2012
Renewed uncertainty over Europe's ability to deal with its
spawning debt crisis following elections in Greece and France hammered
stock markets today, with the main exchange in Athens down a massive 8%.
Investors have been particularly spooked by the election in Greece yesterday, which has resulted in a split Parliament where no party looks like it will be able to form a government.
The two parties that governed as a coalition for the past six months were pummelled to the benefit of more extreme parties of the right and left. The socialist Pasok party suffered the biggest retreat. Its share of the vote collapsed from around 43% in the last election in 2009 to a little over 13%.
A period of uncertainty looms for the bailed-out country, which is in its fifth year of recession and has over half its youth out of work following big spending cuts and tax increases in return for crucial international bailout funds. If no government can be formed that can command a majority in Parliament, another general election within the next two months seems possible.
"As for the Greek elections, they resulted in complete uncertainty with the possibility of another election taking place in the near future in order to try and put in place a government that can actually have some modicum of control," said Gary Jenkins, managing director of Swordfish Research.
With more than 99% of the vote counted, conservative New Democracy led with 18.9% and 108 of Parliament's 300 seats. Party leader Antonis Samaras, who backs Greece's bailout commitments for austerity, will launch coalition-forming talks later in the day.
Further weighing on sentiment is yesterday's defeat of French President Nicolas Sarkozy to his socialist rival Francois Hollande, who has campaigned on the need for more growth-generating economic policies and less reliance on austerity. Final results from France's presidential election show Hollande narrowly defeated incumbent Nicolas Sarkozy with 51.62 % of the vote.
Even German Chancellor Angela Merkel suffered a setback yesterday in a regional election in the northern state of Schleswig-Holstein. Merkel and her government have borne the brunt of the criticism over Europe's austerity drive.
"Election defeats for President Sarkozy, and for the main coalition parties in Greece and for Angela Merkel's party in Schleswig Holstein highlight voter backlash against austerity, economic contraction in unemployment," said Neil MacKinnon, global macro strategist at VTB Capital.
In Europe, Germany's DAX was down 1.4% at 5,468, while the CAC-40 in France fell 1.2% to 3,125. The FTSE 100 of leading British shares was closed for a public holiday.
Greek shares suffered worse, trading 8.2% lower.
In the currency markets, the euro recovered some of its poise after falling to a three-month low against the dollar during Asian trading hours. It was up 0.4% at 1.3018 dollars, having earlier fallen to a low of 1.2972 dollars.
Wall Street was also poised to open lower with Dow futures and the S&P 500 futures both 0.7% lower.
Earlier in Asia, Japan's Nikkei 225 index plunged 2.8% to close at 9,119.14 - its lowest finish in three months - with the market's export sector also sapped by a rising yen. Hong Kong's Hang Seng slid 2.6% to 20,536.59. In other Asia markets, Australia's S&P/ASX 200 lost 2.2% to 4,301.30 and South Korea's Kospi shed 1.6% to 1,956.44.
Oil prices fell alongside equities, with the benchmark New York rate down 91 cents at 97.58 dollars a barrel.
- 1 Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Weather bomb in pictures: Storms cuts power for tens of thousands – and snow is on the way
Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
Russell Brand was rendered speechless on Question Time by this man
Fury at Airbus after it hints the super-jumbo may be mothballed
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
Sony hack: Angelina Jolie branded 'seriously out of her mind' in further embarrassing leaked email saga
Panic Saturday: 13 million Britons spend £1.2bn – while 13 million others across the country live in poverty unable to afford food
iJobs Money & Business
$200 - $350 per annum: Carlton Senior Appointments: Managing Producer Office...
$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...
Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...
Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...