World markets were mixed Monday after Socialist Francois Hollande defeated president Nicolas Sarkozy, leaving investors worried about the future of austerity throughout Europe.
"[Markets dropped] because of France," said Anthony Conroy, head trader at BNY ConvergEx Group. "Change breeds nervousness."
Hollande has advocated a shift away from austerity policies to deal with the continent's sovereign debt crisis and advocated for more economic stimulus. But the concern is whether or not such policies will derail previously-announced bailout deals, in which stronger economies such as Germany provide assistance for the weaker economies facing default on their debt.
In the Greek elections the two most established parties both lost seats in parliament, leaving no party with anything close the majority of seats needed to form a government. The vote could set the stage for a new round of elections, and prolonged uncertainty for how Greece will comply with terms of the European bailout package.
Marc Chandler, market strategist for Brown Brothers Harriman, said the elections "sparked a quick but dramatic bout of risk-off activity," especially with the Greek stock markets, which fell more than 6%, before recovering.
"The political uncertainty regarding the electoral outcome in France and Greece is resolved, but now the key unknown is the policies of the new governments," wrote Chandler, in a research note.
Little economic data is expected in the U.S. on Monday beyond a report on consumer credit for March.
U.S. stocks sold off Friday, ending the week lower, after the government's April jobs report came in weaker than expected.
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