News

Uncertainty Grips Financial Markets in Wake of European Elections

A trader reacts at his desk in front of the DAX board at the Frankfurt stock exchange, May 7, 2012.
A trader reacts at his desk in front of the DAX board at the Frankfurt stock exchange, May 7, 2012.

Uncertainty is gripping world financial markets, after elections in Greece and France raised concerns about the future of austerity measures to help rescue Europe's debt-ridden governments and its ailing economies.

Key Asian markets fell sharply Monday, with Japan's Nikkei index closing down 2.8 percent and Hong Kong's Hang Seng off 2.6 percent.  The Athens stock exchange plunged nearly 7 percent after the vote in Greek national elections left immediate formation of a new government in doubt.

U.S. stocks traded in a narrow range, largely unchanged from Friday's close.  After initially falling, both the Paris and Frankfurt markets ended up for the day.  The value of the euro dipped below $1.30 before regaining some strength.

With Greek voters splitting their votes among a wide array of political parties, investors cut their holdings on the Athens market.  Financial analyst Platon Monokroussos said the political uncertainty weighed heavily on stock trading. "The local market is opening lower today with significant pressure on bank stocks.  This is apparently a reflection of the uncertainty related to the election outcome.  The eurozone is also trading lower today, and all eyes will be on the efforts by political parties to form a new coalition government in Greece," he said.

In France, voters elected Socialist Francois Hollande as president. He has pledged to push back against German-led austerity programs and called for higher taxes on the wealthy and measures to boost economic growth.

Europe has spent hundreds of billions of dollars on bailouts - twice for Greece, and once each for Ireland and Portugal - and has a new rescue fund slated to take effect in July.  But to get the money, the European Union and the International Monetary Fund insisted the countries make sharp, unpopular spending cuts.

The European concerns follow weaker-than-expected jobs data from the United States released Friday.

Some information for this report was provided by AFP and Reuters.

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Comment Sorting
Comments
     
by: clyde barrow
May 07, 2012 10:02 AM
Rob them banks if they can't supply enough work!

by: jose
May 07, 2012 10:00 AM
down with the current economic system, Let the world burn baby!

by: jedy -China
May 07, 2012 5:55 AM
New president can conjure for much money to push economy to meet his voters? Where is the money from? I hope it is a good beginning!

by: Gab, the market always reacts to change, aways
May 07, 2012 3:08 AM
It does not matter whether you are on the right or the left, the money has to come from some where. Why don't they just elect a mathematician. I wish Hollande well, but you cannot change the math with talk. The Western world is going to have to change its spending habits no matter who is in Office.

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