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Greece fails to elect a President New snap election due 25th January

Article By: ,  Financial Analyst
December 29, 2014 11:29 AM

Stock markets in Europe fell after Greek lawmakers failed to elect a new President in a parliamentary vote on Monday, meaning the country now faces another snap election on 25th January. Stavros Dimas, the only candidate, failed to secure a 180 vote majority required to become President, falling 12 votes short, meaning a snap election must now be called creating yet more political and economic uncertainty in the region.

The troubling aspect this vote now poses is the potential for the leftist and anti-bailout Syriza party to gain more seats in the new election. Syriza wants to re-negotiate the country’s bailout with the EU and has been gaining ground in recent opinion polls, leaving the potential for the whole issue surrounding a Grexit (Greece exit from the EU) to rear its ugly head once again.

Alexis Tsipras made strong claims in reaction to the vote, saying that “in a few days, austerity bailouts will be a thing of the past.” Greece’s Prime Minister Samaras countered with “we will not allow anyone to put Greece’s place in Europe in question.”

In reaction, the Greek stock market fell 11% in yet another disastrous day following a 12% fall on 9th December. The Greek stock market – the Athens composite equity index – has now lost more than 45% since the hitting an annual high in March.

Yields on 10-year Greek government bonds rose above 9%, jumping more than 0.5% whilst German 10-year bonds fell to a record low of 0.564% as investors sought safer havens. The German DAX fell more than 1%.

Here’s a chart of the Athen’s composite index:

Tepid UK market

The Greek Presidential vote and low market volumes with most investors eyeing their New Year’s Eve parties than their portfolio’s created a somewhat tepid UK market on Monday, the first trading day after Christmas. The FTSE 100 had been mostly trading within a 30-pt trading range for much of the day before the Greek news broke. At the time of writing, the FTSE was trading higher by 0.3% at 6629, with the gains driven mostly by strength in mining stocks.

Here’s a list of the top risers at the time of writing:

 

 

And here’s where the majority of the gains have come from:

 

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