Greek Bonds and Stock Market Drop After Snap Election Announcement

Greece’s stock market plunged 11 percent on Tuesday and bond yields spiked after the country’s government surprised investors by announcing a snap presidential vote.

The election was originally scheduled for the new year, but will now take place next week. The news, announced late Monday, caused the Athens Stock Exchange to fall 11 percent by midday on Tuesday, and the yield on Greek 10-year government debt to rise 29 basis points to 7.63 percent.

Greece’s banks were among the worst hit, with the National Bank of Greece trading down around 15 percent, Piraeus bank down 17 percent and Attica bank down 26 percent.

On Monday, euro zone finance ministers signaled that they were in favor of granting Greece a two-month extension to its bailout program, which Athens will ask for on Tuesday.

Prime Minister Antonis Samaras brought forward the election to select a new president after failing to win backing from Brussels over his 2015 budget. The first of three rounds of voting will be held on December 17.

A failure by Samaras to get his candidate elected for president – who has yet to be announced – could trigger early elections, Reuters reported Tuesday.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza