“On days like today, you just can’t win,” said Davy’s analyst Barry Dixon as European stock exchanges tumbled across the continent on the back of political uncertainty.
The French CAC 40 index suffered one of the biggest losses.
It fell by 2.78% as the country’s president-elect, François Hollande, marked a change in fiscal policy for Europe’s second largest country.
Mr Dixon put the fall in the markets across Europe down to renewed concerns around the future of the euro.
He said there were two conflicting schools of thought on the future of the euro.
“Political change will threaten the fiscal discipline in countries like France, Italy, and Spain resulting in bigger deficits.
“On the flipside this could lead to growth in these countries.”
Mr Dixon said it was clear from looking at the market that those taking the “bearish view”, that deficits would be bad for Europe, had won out.
Mr Dixon said that even in Germany where we have seen good industrial production figures the DAX index was down 1.9%
“We have seen good industrial production figures out of Germany, but it was immediately discounted as they were historical figures, so it didn’t matter.”
There was only one country who’s index climbed, Portugal. The Portuguese PSI 20 was up 0.88%, bucking the Europe-wide trend.
Mr Dixon put the Portuguese rise down to the differential between that country’s market and stronger European countries. He said that so far this year Portugal was down 20% while countries such as Germany and Denmark were up 11% and 17% respectively.
“The differential between them is too wide, traders are selling safer countries. It doesn’t mean they are less risky a prospect just that on a relative basis,” he said.
The FTSE 100 was down 1.78%, the ISEQ was down 1.79% and the Italian MIB fell 2.37%.
“The markets don’t like uncertainty,” said Mr Dixon.
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