The aftermath of the elections in Greece and France during the weekend has rattled financial markets on Monday. Fears over the eurozone’s ability to reduce spending and stop the bleeding after the election of a socialist president in France and the uncertainty over the results in Greece sent the euro tumbling to a three-month low.
The election of François Hollande in France has been rapidly overshadowed on Monday by the uncertainty surrounding the Greek election, where angry voters didn’t give any single party enough votes to form a government alone. The pro-austerity conservative New Democracy party came first with just under 19 per cent of the vote and now has three days to form a coalition with other parties to form a government, but an agreement is not likely and another election as early as next month is possible.
From the Associated Press (via Canadian Business Magazine):
The one certainty was that parties backing the draconian international rescue package lost their majority in parliament — raising the chances of a possible Greek exit from the common euro currency.
The uncertainty weighed on markets across Europe, with the Athens exchange tumbling 6.4 per cent in afternoon trading.
And from Reuters:
Investors sold bonds of other weaker euro zone member states after the two pro-bailout parties in Greece failed to win a parliamentary majority, rekindling fears over the country’s future in the single currency.
“The Greek election outcome is the ultimate Greek tragedy. Not having a cohesive government means the IMF will not release further funds. Without those funds, Greece will have to leave the euro zone,” Louis Gargour, chief investment officer of London-based hedge fund LNG Capital, said.
Monday, May 7, 2012