Even after the latest election results in Greece, financial markets are greatly concerned about Greece’s future and the prospects for the Eurozone. The two leading parties most likely to take over the government came very close to splitting the bulk of the vote equally, which left investors unsure of exactly what measures would be taken by a new government to combat Greece’s debt crisis.
The pro-Euro pro-austerity New Democracy party received 29.7% of the vote while the antiausterity party Syriza party garnered 26.9% of the electorate. The prior ruling party Pasok received 12.35, finishing third.
This means that if the New Democracy party wants to form a ruling coalition, it will need to join with the Pasok party.
Even though the two parties joining would mean that Greece will attack its debt with austerity measures, financial markets still dropped after an initial gain once the election results were announced, leading observers to conclude that investors still fear for the future of the Euro. In Europe, the Stoxx Europe 600 index XX:SXXP +0.06% fell 0.1% to 243.94; in the United States the Dow Jones Industrial Average DJU2 -0.31% lost 52 points to 12,658, Standard & Poor’s 500 index SPU2 -0.52% fell 5 points to 1,332.60, and futures for the Nasdaq Composite Index NDU2 +0.27% lost 5 points to 2,559.00.
Khurram Ali, broker at Valbury Capital, commented on the results:
It seems quite doubtful that anyone believes that the euro zone is out of danger or stable until the new Greek government is formed and austerity measures implemented and with Italy and Portugal still hanging in the balance there is still a lot of work to be done. It wouldn’t be that surprising if today’s rally fades away before the end of the week and we are back here discussing the same subjects as last week.