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| Eurozone crisis live: Greek market rocked by election | Eurozone crisis live: Greek market rocked by election |
| (40 minutes later) | |
| 11.07am: News in from Athens where Helena Smith, our correspondent, says after Greece's shock vote it is far from certain whether the debt-stricken country will continue receiving rescue loans. | |
| Greek TV channels are reporting that the country's electoral earthquake has been met with "stunned silence" by officials at the International Monetary Fund in Washington. "Our sources at the fund are telling us they had no idea of the extent of the anger and anti-austerity feeling in Greece. They are amazed," said Alpha TV's Washington correspondent. | |
| Given the IMF's role in the two bailouts that have propped up the Greek economy since May 2010, the fund is watched closely by US-based Greek journalists now famed for putting IMF spokesmen on the spot in daily briefings. "They are insisting they want commitments to the [debt relief] program," the correspondent said. | |
| A team of EU monitors, to be placed permanently in the capital is expected to arrive within the week. Greek radio channels this morning reported the inspectors would want to see "solid proof" that Athens is determined to stick to the principles of its latest €130 bn financial support program. | |
| The debt-stricken country faces payment of civil servants' wage checks and pensions in less than a month – bills worth about €1.5 bn. Greece has been told, clearly, by creditors that failure to adhere to the rules – for which read austerity measures and unpopular structural reforms -- will result in a freezing of funds and automatic default. "There are doubts whether the [rescue] loans will keep coming in," said Flash radio's economic reporter. "And they extend to whether the country will be able to tap the special account that has been set up [for the funds]." | |
| Prior to Sunday's election, the German finance minister Wolfgang Schäuble warned Greece that it should "expect to pay the consequences" if it did not abide by its commitments. He may now be ruing his words – the German intervention has been interpreted by analysts as one more reason for pushing Greeks to massively reject the EU-dictated belt-tightening. Greece's conservative New Democrat leader, Antonis Samaras, is expected to be given a mandate to form a government after 1 PM when, in keeping with tradition, the speaker of the Greek parliament will formally present president Carolos Papoulias with the results of the vote. | |
| He will have three days in which to persuade other parties to join him in a coalition – a feat that few commentators currently think possible. If that is the case, the mandate will then be given to Syriza, the coalition of radical left and green groups which emerged as the election's biggest winner, garnering 16.6 % of the ballot compared to the 13.2 % captured by the mainstream socialist Pasok – a vote that now makes it the second biggest party in the 300-seat parliament. | |
| Fears of the country plunging into protracted political instability were reflected in the continued free-fall of the Athens stock exchange where banks shares have lost up to 20% of their value this morning. Meanwhile, repeated pledges by Syriza to annul the latest rescue accord has added to the climate of uncertainty. | |
| Syriza leader Alexis Tsipras told Greeks late Sunday: "We have won the war but not the battle." That, he said, would come when the "cruel bailout measures" were cancelled once and for all. "The parties that signed up to them are now in a minority," he said. | |
| Speaking on the eve of the poll, the 38-year-old politician reassured me that he believed in the euro "but not the policies pursued in its name." Along with the annulment of the controversial loan agreement he said his party's priority would be to create a "protective shield" around the poor who had been worst hit by repeated rounds of austerity. "It could start with the rich paying taxes. They have to do this. There is too much tax evasion by Greeks who have money," he told me. | |
| 10.58am: ...and some analysis of the Greek election, again from Nicholas Spiro. | |
| 1. Greece needed this election like it needed a hole in the head. The results confirm what has been patently clear for some time: there's no political consensus for the kind of reforms that Greece must implement if it wants to remain in the eurozone. Greek parliamentary politics has just become much more fragmented and radicalised. This is a large-scale protest vote with very little consideration of the implications of non-compliance with the terms of Greece's second bail-out package. The strong showing for Syriza is a rebuke to Pasok and New Democracy which will struggle to form a durable coalition government. Politics has trounced economics. | |
| 2. The Greek crisis was overshadowed by the Spanish one over the past few months. This election brings into sharper relief the growing political risks to an adjustment programme that is already bedevilled with huge fiscal, structural and institutional risks. To many external observers, particularly in Germany, the result of this election will be interpreted as a sign that Greece has had enough of non-stop austerity and recession and refuses to accept the stringent conditions attached to its financial rescue package. | |
| 3. The markets expected the result of the Greek election to be a messy one. This adds to what remains a very bleak picture for a country whose membership of the eurozone is hanging by a thread. It will now prove even more difficult for Athens to make headway on implementing key fiscal and structural reforms. | |
| 10.57am: More analysis of the French election from Nicholas Spiro, managing director of Spiro Sovereign Strategy. | |
| 1. Franҫois Hollande's victory is a historic one in France and a seminal event in European politics. It's the first time since 1988 that the left has won a French presidential election and the first time since 1981 that a Fifth Republic president failed to get re-elected. L'anti-Sarkozysme helped bring Mr Hollande to power. Mr Sarkozy lost because he failed to win over a sufficient number of National Front voters, many of whom grudgingly backed Mr Hollande. Although the right won a bigger slice of the vote in the first round, the political arithmetic in the second favoured Mr Hollande. | |
| 2. Mr Hollande appealed to the anxieties of French voters. Austerity is a dirty word in France, but never more so than now. This election is a rebuke to Germany's austerity-focused approach to managing the eurozone crisis. Yet satisfying anxieties is one thing, proposing credible solutions is another. The election was more about Mr Sarkozy's shortcomings than policies to address France's economic weaknesses. While Mr Hollande is not an old-style tax-and-spend Socialist, his understanding of "growth" differs sharply from that of Germany and the ECB. France has just elected a President who believes that austerity is failing and is in favour of more stimulative policies. | |
| 3. The markets will remain suspicious of Mr Hollande. His programme gives investors reasons to be even more concerned about France's creditworthiness. Yet Mr Hollande is by nature a pragmatist and will attempt to reach a consensus with Chancellor Angela Merkel as quickly as possible. The question is not whether he will embark on a spending spree - he can't and he won't - but to what extent he will feel emboldened to challenge Germany and the ECB. It's noteworthy that Mr Hollande's proposals to erect a stronger financial "firewall" are actually more in line with market thinking. | |
| 4. Attention now turns to France's parliamentary election next month. In many ways, this is the election to watch. The anti-austerity backlash in France has just been given a huge boost and the centre-right UMP is unlikely to do well. If the new parliament is decidedly "populist-leftist", this may make it more difficult for Mr Hollande to govern in a centrist manner. | |
| 10.42am: Let's have a look at some of the European papers. Germany's liberal daily Süddeutsche Zeitung, based in Munich, is enthused by Hollande's victory. With the heading "Adieu election campaign, bonjour reality," French correspondent Stefan Ulrich writes from Paris: | |
| France must face the truth after the victory of François Hollande over Nicolas Sarkozy. The astute Socialist can show the ailing nation the right way in this situation. For Merkel Hollande might turn out to be the better partner. "Merklande" has a good chance to meet the challenge posed by Europe. | |
| The German conservative daily Frankfurter Allgemeine Zeitung is, naturally, far more cautious. Under the headline "Moi, Président," Günther Nonnenmacher writes: | |
| It wasn't enthusiasm but his persistency that led François Hollande to victory. And the weakness of his opponent Sarkozy... | |
| President Hollande will not be allowed any time to get used to the job. In ten days G8 leaders meet in America, directly followed by the NATO summit in Chicago: with his decision to withdraw French troops from Afghanistan by the end of the year Hollande will arouse little enthusiasm. Then follow European matters, where the first test will be with how much persistency Hollande will try to change course. | |
| And France's left-leaning daily La Libération writes: "For the Socialists, the real work begins". In an editorial entitled "Enfin" ("Finally"), its director Nicolas Demorand is jubilant. | |
| The joy, the immense joy of watching one parenthesis close and a curse fade. And in what manner! François Mitterrand was not a historic anomaly but simply the first president from the left. Now there's a second: François Hollande. For the people of the left, 2012 revives 1981, gives back life and colour to those old sepia images that seemed condemned to the history books. | |
| 10.07am: The euro has tumbled this morning, hitting a three-month low against the dollar, at 3 1/2 year low against the pound and a 2 1/2 month trough against the yen. | 10.07am: The euro has tumbled this morning, hitting a three-month low against the dollar, at 3 1/2 year low against the pound and a 2 1/2 month trough against the yen. |
| Traders reckon the euro has further to fall in coming days. | Traders reckon the euro has further to fall in coming days. |
| 10.02am: Some more reaction, from Markus Huber at ETX Capital: | 10.02am: Some more reaction, from Markus Huber at ETX Capital: |
| Although Mr. Hollande victory yesterday didn't come to many as much of a surprise, especially after having lead the polls with a sizeable lead for several months and being indorsed by all of the parties leaning to the left after the first round of presidential elections, stock markets are still struggling this morning to come to terms with the fact that the alliance Merkel-Sarkozy has been terminated. | Although Mr. Hollande victory yesterday didn't come to many as much of a surprise, especially after having lead the polls with a sizeable lead for several months and being indorsed by all of the parties leaning to the left after the first round of presidential elections, stock markets are still struggling this morning to come to terms with the fact that the alliance Merkel-Sarkozy has been terminated. |
| The main problem stock markets across Europe are facing this morning is not that Mr. Hollande has become the new French president but rather the uncertainty his election is bringing with him. While many are convinced that president Holland will be fairly limited in regards to what he can do when it comes to turning back austerity measures already agreed on within the eurozone, many are worried that the eurozone will be less united in the future and therefore not be able to combat the financial crisis and any future crisis in such a quick and decisive manner as before. | The main problem stock markets across Europe are facing this morning is not that Mr. Hollande has become the new French president but rather the uncertainty his election is bringing with him. While many are convinced that president Holland will be fairly limited in regards to what he can do when it comes to turning back austerity measures already agreed on within the eurozone, many are worried that the eurozone will be less united in the future and therefore not be able to combat the financial crisis and any future crisis in such a quick and decisive manner as before. |
| For the next few days and weeks the direction of the stock market will very much hinge on how much efforts all sides, mainly chancellor Merkel and president Hollande will be putting into trying to work together and to find common ground. | For the next few days and weeks the direction of the stock market will very much hinge on how much efforts all sides, mainly chancellor Merkel and president Hollande will be putting into trying to work together and to find common ground. |
| 9.58am: A quick look at the stock markets: Athens is still down 6.6% at 644.45, after the country's main parties failed to win enough votes to form a ruling coalition. The French market is holding up reasonably well, only down 1.4% while Germany's Dax has lost 1.6%. | 9.58am: A quick look at the stock markets: Athens is still down 6.6% at 644.45, after the country's main parties failed to win enough votes to form a ruling coalition. The French market is holding up reasonably well, only down 1.4% while Germany's Dax has lost 1.6%. |
| 9.49am: My colleague Alexandra Topping is doing a sister live blog on the the latest news, reaction and analysis after Hollande's victory in France and the big protest vote in Greece. | 9.49am: My colleague Alexandra Topping is doing a sister live blog on the the latest news, reaction and analysis after Hollande's victory in France and the big protest vote in Greece. |
| European leaders are busy congratulating Hollande on his victory, even David Cameron, who declined to meet the Socialist president on a recent trip to London. One of the first to call was German chancellor Angela Merkel, who invited Hollande to Berlin. That meeting will be interesting, given his insistence in his victory speech that "austerity can no longer be the only option". | European leaders are busy congratulating Hollande on his victory, even David Cameron, who declined to meet the Socialist president on a recent trip to London. One of the first to call was German chancellor Angela Merkel, who invited Hollande to Berlin. That meeting will be interesting, given his insistence in his victory speech that "austerity can no longer be the only option". |
| 9.42am: Markets have clearly taken fright at the election results. Credit default swaps in France, Spain and Italy have risen. French five-year CDS are up 5 basis points to 194, Spanish CDS up 9 points to 486 and Italian swaps are up 12 basis points to 442, according to Markit. | 9.42am: Markets have clearly taken fright at the election results. Credit default swaps in France, Spain and Italy have risen. French five-year CDS are up 5 basis points to 194, Spanish CDS up 9 points to 486 and Italian swaps are up 12 basis points to 442, according to Markit. |
| 9.38am: Looking at the surge in Mediterranean bond yields - Greek ten-year yields have reached 23%! - while the equivalent German yield has dropped to 1.56% - David Buik of BGC Partners, says: | 9.38am: Looking at the surge in Mediterranean bond yields - Greek ten-year yields have reached 23%! - while the equivalent German yield has dropped to 1.56% - David Buik of BGC Partners, says: |
| Many expect Mediterranean country bond yields to continue rising until the EU gets its act together. Markets may be sepulchral today. Tomorrow is a new dawn – I am less than convinced how brave it will be! | Many expect Mediterranean country bond yields to continue rising until the EU gets its act together. Markets may be sepulchral today. Tomorrow is a new dawn – I am less than convinced how brave it will be! |
| He also notes that bank analyst Ralph Silva bank has made the following succinct observation against a background of French euphoria and Greek bravado – "None of these newly elected politicians have actually seen the books! They may find the cupboard is bare!" | He also notes that bank analyst Ralph Silva bank has made the following succinct observation against a background of French euphoria and Greek bravado – "None of these newly elected politicians have actually seen the books! They may find the cupboard is bare!" |
| 9.24am: Mohamed El Erian, chief executive of bond fund giant Pimco, was quick to give his view on the national elections in France and Greece, and regional elections in Germany. | 9.24am: Mohamed El Erian, chief executive of bond fund giant Pimco, was quick to give his view on the national elections in France and Greece, and regional elections in Germany. |
| Writing on the CNBC guest blog last night, he said: | Writing on the CNBC guest blog last night, he said: |
| The common message from the electorate is undeniable, reminiscent of a famous line in the 1976 movie Network: "I'm as mad as hell, and I'm not going to take this anymore!" | The common message from the electorate is undeniable, reminiscent of a famous line in the 1976 movie Network: "I'm as mad as hell, and I'm not going to take this anymore!" |
| The first thing that Sunday's elections scream out is anti-incumbency. French president Sarkozy joined the growing list of leaders that have been thrown out of office by disgruntled citizens. In Greece, exit polls suggest that the combination of the two usually dominant parties failed to secure even 50% of the votes. And in Germany, the ruling coalition seems to have experienced another setback. | The first thing that Sunday's elections scream out is anti-incumbency. French president Sarkozy joined the growing list of leaders that have been thrown out of office by disgruntled citizens. In Greece, exit polls suggest that the combination of the two usually dominant parties failed to secure even 50% of the votes. And in Germany, the ruling coalition seems to have experienced another setback. |
| The elections also show that an unusually large number of Europeans are opting for fringe parties, some of which are yet to define their vision beyond the need to dismantle the past. In Germany, exit polls imply that the Pirate party may have secured 8% of the vote in Schleswig-Holstein, giving it a voice in a third regional parliament after similar success in Saarland and Berlin. | The elections also show that an unusually large number of Europeans are opting for fringe parties, some of which are yet to define their vision beyond the need to dismantle the past. In Germany, exit polls imply that the Pirate party may have secured 8% of the vote in Schleswig-Holstein, giving it a voice in a third regional parliament after similar success in Saarland and Berlin. |
| In Greece, both extreme left and extreme right parties are celebrating a surge in their popularity. And all this follows France's extreme right wing presidential candidate getting almost 20% of the votes in the first round a couple of weeks ago. | In Greece, both extreme left and extreme right parties are celebrating a surge in their popularity. And all this follows France's extreme right wing presidential candidate getting almost 20% of the votes in the first round a couple of weeks ago. |
| Simply put, this translates into more fragmented European politics, at least in the short run. A politically more disparate Europe will find it even more challenging to reach common ground on a range of important issues. | Simply put, this translates into more fragmented European politics, at least in the short run. A politically more disparate Europe will find it even more challenging to reach common ground on a range of important issues. |
| 9.14am: Good morning and welcome to our eurozone live blog, which on this public holiday in the UK promises to provide lots of twists and turns following the elections in France and Greece. | 9.14am: Good morning and welcome to our eurozone live blog, which on this public holiday in the UK promises to provide lots of twists and turns following the elections in France and Greece. |
| The prospects of a fight against austerity measures in Europe after the election of François Hollande - the first Socialist president in France for nearly 20 years - and an inconclusive election in Greece have already rattled markets in early trade. | The prospects of a fight against austerity measures in Europe after the election of François Hollande - the first Socialist president in France for nearly 20 years - and an inconclusive election in Greece have already rattled markets in early trade. |
| The Greece stock market fell 7.7% in early trading to 636.7 while the banking index was off 19%. In France, the CAC 40 index dropped 1.7%. The euro fell as far as $1.2955, its lowest since 25 January. | The Greece stock market fell 7.7% in early trading to 636.7 while the banking index was off 19%. In France, the CAC 40 index dropped 1.7%. The euro fell as far as $1.2955, its lowest since 25 January. |
| There were also early signs of a flight to save havens. German government bond futures reached a record high of 142.40 in early trade while the yields on 10-year German bonds - which move inversely to price - were 2 basis points lower at 1.56%. The record low of 1.549% is within sight. | There were also early signs of a flight to save havens. German government bond futures reached a record high of 142.40 in early trade while the yields on 10-year German bonds - which move inversely to price - were 2 basis points lower at 1.56%. The record low of 1.549% is within sight. |
| Over night, Japan's Nikkei 225 index lost nearly 3%, to reach its lowest close in nearly three months of 9,127.39. Hong Kong's Hang Seng slid 2.4% to 20,583.14. | Over night, Japan's Nikkei 225 index lost nearly 3%, to reach its lowest close in nearly three months of 9,127.39. Hong Kong's Hang Seng slid 2.4% to 20,583.14. |
| London stock markets are closed today which is likely to ensure that trading volumes across the eurozone unusually thin. | London stock markets are closed today which is likely to ensure that trading volumes across the eurozone unusually thin. |
| Gary Jenkins of Swordfish Reasearch was quick with his take on the elections this morning. | Gary Jenkins of Swordfish Reasearch was quick with his take on the elections this morning. |
| The election of the new French president Mr Hollande may well be a seminal event in the history of the eurozone and over the next few days/weeks and possibly months we will see whether he sticks to his intentions to renegotiate the fiscal compact and promote a growth agenda or whether the reality of the situation and the German position results in him moderating his policies. Whilst many people have suggested that a Hollande victory is "priced in" to the markets that remains to be seen and it is his relationship with Merkel that may well determine the future of the eurozone. | The election of the new French president Mr Hollande may well be a seminal event in the history of the eurozone and over the next few days/weeks and possibly months we will see whether he sticks to his intentions to renegotiate the fiscal compact and promote a growth agenda or whether the reality of the situation and the German position results in him moderating his policies. Whilst many people have suggested that a Hollande victory is "priced in" to the markets that remains to be seen and it is his relationship with Merkel that may well determine the future of the eurozone. |