Politics pushed Europe’s stock exchanges deep into the red on Monday and the effect splashed over onto financial markets world wide also pulling down the euro’s value.
Investors sold off shares to buy things like safe-haven German government bonds.
The main focus was France where Socialist Francois Hollande is looking likely to be the next president, but in the first round of voting there was a higher turnout for the extremes – on the left and the right.
Market analyst Francois Chaulet at Montsegur Finance in Paris said that creates uncertainty: “For foreign investors, seeing a marked radicalisation of politics in France, with the Front National getting 18-19 percent, and the far left also getting strong support, that makes them nervous about the ability of the future government to maintain good social cohesion.”
Also fuelling fiscal concerns about the eurozone was the government crisis in the Netherlands, a close ally of Germany in the austerity push.
In addition there was weak economic data with surveys of companies in Germany and France showing contraction denting hopes for economic growth in the region.