The European stock markets got a rocky start on Monday morning and fell to four and half month lows, after the election results from Greece and France showed voters opposed to parties that backed austerity measures and renewed doubt over Europe's ability to tackle the debt crisis, reported Reuters.
France elected Socialist Francois Hollande as president and in his acceptance speech, he said, "Europe is watching us, austerity can no longer be the only option," according to the BBC.
However, investors were particularly spooked by the election results in Greece which yielded a split parliament, with no party holding a clear enough majority to form a government. The two major center-right and center-left parties took a beating at the polls, with voters giving more votes to fringe parties, according to the Associated Press.
If no government can be formed as a result of the elections in Greece, which is now facing its fifth year in recession, and public anger over austerity measures, another election may be held within the next two months, said the AP.
Louis Gargour, the chief investment officer of London-based hedge fund LNG Capital, said, "The Greek election outcome is the ultimate Greek tragedy. Not having a cohesive government means the IMF will not release further funds. Without those funds, Greece will have to leave the euro zone," according to Reuters.
The uncertainty got to the markets and the euro dipped below $1.30 against the dollar in Asian trading, according to The Wall Street Journal, a low last seen in January.
Greek stocks were down 7.8 percent, but the stock market was closed in London, blunting the effect. The French CAC-40 was down 1.35 percent, the German DAX was down 1.46 percent, the Spanish IBEX-35 was down 1.74 percent and the Italian FTSE MIB was down 1.33 percent, according to The Wall Street Journal.
According to Reuters, the stock markets saw a turnaround after the halfway point on Monday's session, with the Euro STOXX 50 index of eurozone blue chip companies at 2,252.65 points, after falling to a five month low of 2,204.73.
In addition to uncertainty fueled by the Greek and French elections, Reuters noted that the sharp declines in the Asian markets may also have contributed to the early morning losses.
The euro jumped back up to $1.30 and markets were boosted by fresh data showing that factory orders in Germany surged in March, according to The Washington Post. The figures from later in the day showed the German DAX down 0.4 percent and France's CAC-40 up 0.45 percent.