Asian markets and the euro slumped yesterday after voters in France and Greece voted out their governments in a backlash against austerity measures aimed at battling the eurozone crisis.
Adding to the bearish atmosphere was weak jobs data from the US last week, which had fueled concerns about recovery in the world’s biggest economy and sent Wall Street sliding.
Tokyo dived 2.78 percent, or 261.11 points, to 9,119.14; Sydney fell 2.16 percent, or 94.7 points, to 4,301.3 and Seoul shed 1.64 percent, or 32.71 points, to 1,956.44.
Hong Kong dropped 2.61 percent, or 549.35 points, to 20,536.65, but Shanghai was almost unchanged, edging down 0.07 points to 2,451.95.
In other markets, Manila closed down 1.28 percent, or 68.02 points, at 5,229.53; and Wellington closed 0.27 percent, or 9.65 points, lower at 3,540.13.
French President Nicolas Sarkozy was defeated in the second round of the French presidential election on Sunday by Socialist Francois Hollande, who had campaigned on a platform of boosting growth instead of introducing huge spending cuts to overcome the country’s deficit.
Sarkozy and German Chancellor Angela Merkel have led a strident drive for budget cuts across Europe as the only way to drag the region out of a crisis that has raised concerns that the eurozone project could collapse.
“The Hollande win in France is not necessarily a surprise. However, it brings home the reality that incumbents following the [EU’s] prescribed austerity measures are going to find it difficult to remain elected,” National Australia Bank said in a note.
“What happens to these austerity measures now are what are weighing on [the euro],” the bank said.
The euro fell to US$1.2954 in early trade yesterday, its lowest level since late January, while also slumping to ￥103.22 at one stage, its worst since the middle of February.
The currency later traded at US$1.3017 and ￥103.52, still down from US$1.3091 and ￥104.50 late on Friday in New York.
In Greece, the two main parties — the conservative New Democracy and the left-wing Pasok — suffered huge losses in a general election, with those opposed to more cuts winning almost 60 percent support.
The results follow months of protests against austerity measures across the country after the government was forced to ask for two bail-outs.
New Democracy, led by Antonis Samaras, remained the largest party, but with it and Pasok scoring only about 32 percent between them, the result raised the possibility of fresh elections soon.
Also on Sunday, Merkel’s Christian Democrats grabbed only about 30 percent of the vote in polls for the small state of Schleswig--Holstein, a setback ahead of national elections next year.
“With the growing influence of anti-austerity political blocs, tensions among the eurozone will likely be intensified and a wave of renegotiations for bail-out -programs may be sparked,” Kintai Cheung, an analyst at Credit Agricole, said in a note.
The results raised concerns in Japan and China, which both hold huge amounts of euro-denominated debt, with Tokyo saying it would monitor Hollande’s economic policies closely and Beijing warning that his win would not be enough to dig France out of its predicament.
Ratings agency Standard & Poor’s, which stripped France of its top “triple-A” rating in January, said Hollande’s victory would have no immediate impact on its rating or outlook.