Despite Initial Tremors, Markets Shake Off Greek Election Results

By DAVID JOLLY and NEIL GOUGHJAN. 25, 2015

The New York Times

PARIS — Financial markets on Monday took in stride the result of Greek parliamentary elections, which handed a decisive victory to the left-wing Syriza party a day earlier.

Syriza and its outspoken leader, Alexis Tsipras, had campaigned against the austerity measures imposed on Greece by its international creditors.

The Euro Stoxx 50 index, a barometer of eurozone blue chips, was up about 0.4 percent in late morning trading on Monday, while the FTSE 100 index in London was down 0.2 percent. The euro rose 0.3 percent to $1.1241.

Markets trembled initially, sending the yield on the 30-year Treasury bond in the United States to a record low in early trading, as investors moved funds to assets perceived as safer. The euro briefly dropped to as low as $1.1098, its lowest levels since 2003.

The change in the Greek political landscape comes at a time of unsettling shifts in the world economy that have left policy makers and investors on alert for disruptions in financial markets. Among the most important developments: Crude oil prices have continued to fall this year after dropping around 50 percent in 2014, and the European Central Bank last week announced that it planned to begin buying 60 billion euros, or about $67 billion, worth of bonds each month until inflation rises to its official target of just under 2 percent.

Adding to concerns, economists at the International Monetary Fund warned last week that growth prospects were dimming, apart from in the United States, raising the specter of a global slowdown that would further exacerbate the problems of low price pressures and growing inequality.

Derek Halpenny, the European head of global markets research at Bank of Tokyo-Mitsubishi in London, said in a research note that he did not expect the change in Athens to create “existential risks” to the euro, or for strong euro-selling pressures to emerge in the short term.

But Mr. Halpenny said that there were “certainly increased risks, and an error in the negotiating stage could mean this becomes a bigger negative for the market.”

European bonds, whose prices had been rising for months in anticipation of the European Central Bank’s move last week to stimulate the economy, were mostly stronger on Monday, driving down yields.

Spanish and Italian bond yields fell to near-record lows, below 1.5 percent. The two countries have been among the biggest beneficiaries of the central bank’s plans. German 10-years bonds were unchanged at 0.36 percent.

But Greek bonds fell amid the postelection uncertainty, with their yields rising to 8.63 percent, the highest in the eurozone. Yields reached a peak of 10.3 percent on Jan. 7, when pre-election jitters were strongest.

The main stock index in Athens, which initially fell more than 3.5 percent on Monday, recovered somewhat and was down about 1 percent in late-morning trading.

Asian stocks were mixed, with major indexes in Tokyo falling about 0.3 percent and Hong Kong shares rising to a similar degree. Trading in Standard & Poor’s 500 index futures indicated that stocks would be little changed at the opening bell in New York.

While polls last week showed Syriza was likely to win the elections, investors on Monday still appeared to be unsettled initially by the results. Most markets around the world had rallied on Friday after Mario Draghi, the president of the European Central Bank, announced a new government bond-buying program to stimulate growth in the eurozone.

Mr. Tsipras, who is positioned to become the next prime minister, has pledged to keep Greece within the eurozone as he seeks to negotiate an easing of austerity measures and to rebuild the economy. The country has the highest unemployment rate in the eurozone, at 25.7 percent as of September, the most recent data available.

David Jolly reported from Paris, and Neil Gough from Hong Kong.