'Seismic Shift' In Europe After French And Greek Elections
Originally published on Mon May 7, 2012 10:53 am
(Note: We updated the market news in this post at midday.)
A victory Sunday by Socialist presidential candidate Francois Hollande in France and the rejection by voters in Greece of that country's austerity policies have caused a "seismic shift" that threatens the future of the euro, The Guardian writes this morning.
The news sent financial markets down in Europe as the day began — but by later in the day "stock prices picked up," as The Wall Street Journal wrote just after noon in the U.S. "Traders decided the [election] results were largely as had been predicted."
"Markets took fright at the results of the French and Greek elections in early trading on Monday," The Financial Times adds. "But by the afternoon the fear had largely dissipated, as investors became more comfortable with an outcome that was broadly in line with forecasts."
The ripple effects from Sunday's elections may linger for a long time, however. As Reuters says:
"Greece's vote, combined with the victory of Socialist Francois Hollande over incumbent Nicolas Sarkozy in a French presidential election, will raise pressure on Europe's paymaster Germany to pursue a more growth-oriented approach to the crisis. But it is far from clear whether Chancellor Angela Merkel, whose insistence on tough deficit reduction in vulnerable southern euro members is popular in Germany, will take more than symbolic steps in that direction, even after Sunday's elections.
" 'This shows that politics is getting out of control in Europe, the gap between politicians and voters is widening, that's what you see in Greece, that's what you see in France,' said Steen Jakobsen, chief economist at Saxo Bank in Copenhagen."
In the Greek parliamentary elections, according to NPR's Sylvia Poggioli, voters "sent a strong message to their country's international creditors ... rejecting their strict austerity policies."
Meanwhile, French voters seemed to be as interested in "getting rid of Sarkozy" as in electing Hollande, reports Eleanor Beardsley. But she adds that Hollande's first trip outside France will be to visit Germany's Merkel, and that he "plans to renegotiate [the] European austerity pact put in place by Sarkozy" and the German chancellor.
"The fear now is that all the hard work that had gone into getting the second bailout package may start to unravel and we can expect some real pressure on stock markets in the coming days," analyst Justin Harper of IG Markets, tells the BBC.