Markets in Europe rose, but only modestly, because of polls that showed Greek voters shifting support toward parties that favor austerity. The news was unexpected. Greeks showed a great level of rebellion against sharp government cost cuts and wage and salary reductions in national voting just a month ago.
Greeks may have come around to the realization that an exit from the European Union would plunge the nation into depression. It also would make it impossible for the central government to raise money. Trade between Greece and its neighbors, already damaged by the economy, would drop even further as Greece returned to the drachma.
The new sentiment could also be a reaction to the reality that Germany’s Angela Merkel, the holder of the EU purse strings, will not allow the region to shift its focus from austerity to stimulus.
According to MarketWatch:
European stock markets rallied on Monday as investors’ appetite for risk was boosted after polls in Greece pointed to a victory for the pro-bailout New Democracy party ahead of next month’s elections.
Douglas A. McIntyre