World markets react to French, Greek elections

 

 

 

World stock markets were mixed after opening lower on Monday as key elections in France and Greece sparked more worries about Europe's ability to handle the burgeoning debt crisis. 

The main stock exchange in Athens fell 8 per cent alone on Monday, its biggest drop since October 2008. 

Meanwhile, Eurozone shares recovered from year lows following a knee-jerk reaction to the election results. Still the German stock exchange was lower while the French stock exchange tip-toed into positive territory. The London Stock Exchange was closed on Monday. 

North American markets opened lower as well. 

The Athens exchange tumbled after Greece's two main political parties failed to win a combined majority as voters backed anti-austerity parties. 

The country, which has already received much financial aid and bailouts from other countries, faces another election within two months if it cannot form a majority government. 

The country is in the fifth year of recession and has more than half its youth out of work following big spending cuts and tax increases in return for crucial international bailout funds. 

"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," Gary Jenkins, managing director of Swordfish Research, told the Associated Press. 

Markets were also roiled after French socialist candidate Francois Hollande defeated President Nicolas Sarkozy in a narrow vote. Hollande campaigned on the need for more growth-generating economic policies and less reliance on austerity. 

"Austerity can no longer be inevitable!" Hollande declared in his victory speech. 

"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," Neil MacKinnon, global macro strategist at VTB Capital, told the Associated Press. 

Despite the election setbacks, world leaders vowed to work with the new French government. 

The White House said President Barack Obama called Hollande after the results were announced. 

"President Obama indicated that he looks forward to working closely with Mr. Hollande and his government on a range of shared economic and security challenges," the U.S. said in a statement. 

"President Obama noted that he will welcome President-elect Hollande to Camp David for the G-8 Summit and to Chicago for the NATO Summit later this month, and proposed that they meet beforehand at the White House." 

Meanwhile, Germany vowed to continue its co-operation with France to maintain European Union policies. 

German Chancellor Angela Merkel, who has worked closely with Sarkozy, called Hollande to congratulate and invite him to visit Germany, German spokesman Steffen Seibert said. 

And Canadian Minister Stephen Harper called Hollande Sunday to express his desire to work closely with France. 

 CTVNews.ca