LONDON (Alliance News) - London markets are set to start lower Monday, ending a bull run of more than a week after Sunday's election saw the left-wing Syriza party sweeping the polls, reigniting worries that Greece will exit the eurozone.
The FTSE 100 is forecast to open 52 points lower at 6,780, following a gain of 0.5% on Friday, and of 3.8% for all of last week.
Greeks revolted against five years of austerity policies in Sunday's landmark vote that saw the leftist anti-bailout Syriza party win parliamentary elections. The party earned 36% of the vote, falling short of an absolute majority in the 300-seat parliament by two seats, the Interior Ministry said.
Its success could have profound ramifications for the future of the eurozone, which is already suffering from a host of economic ills, and could provoke a confrontation with Greece's international creditors, the European Commission, the European Central Bank and the International Monetary Fund.
"The vote of the Greek people has closed the vicious circle of austerity," Tsipras said, declaring Greece's EUR240-million bailout now "a matter of the past".
The euro dropped against the other major currencies in the Asian session on Monday, as Syriza emerged victorious.
The euro fell as low as USD1.1098 for the first time since March 2003. At last week's close, the euro was trading at USD1.1203, and it is quoted at USD1.1200 early Monday, paring losses.
"This weekend?s election of Alexis Tsipras as prime minister of Greece is set to alter the terms of the debate about how European politicians react to the demands for an end to austerity and to the demands about debt forgiveness across Europe," says Michael Hewson at CMC Markets UK. "As recently as last week, calls for any form of debt forgiveness were being ruled out by politicians across Europe, but the fact remains that with the election of Syriza to power, these are inconvenient truths and problems that will now need to be addressed."
In Asia, Japan's Nikkei closed down 0.3% at 17,468.52 as the news from Greece overshadowed an improvement in the Asian country's trade balance. Japan's trade deficit came in at JPY660.7 billion in December, less than the JPY735.2 billion expected by economists. Exports climbed more than expected, and imports also rose solidly.
The Hang Seng in Hong Kong is down 0.1% at 24,819.82 and the Shanghai Composite is 0.9% higher at 3,383.182.
In economic releases Monday, Germany's IFO business sentiment index for January is due at 0900 GMT, and euro area retail sales are due at 1000 GMT.
Brent crude is quoted at around USD48.00 a barrel early Monday, and US benchmark West Texas Intermediate is quoted at USD44.82 a barrel. Gold is hovering just under the psychologically important USD1,300 level, passed Wednesday for the first time since last summer. Early Monday it is quoted at USD1,292.96 an ounce.
In UK corporate news, Aer Lingus confirmed that International Consolidated Airlines Group, owner of British Airways, has made a fresh EUR2.55-a-share bid to take over the Irish flag carrier, its third attempt to do so. The approach values Aer Lingus at EUR1.36 billion.
UK airline Flybe said third-quarter passenger revenue fell by 3.8% to GBP126.8 million and said its hedging profile on both fuel and the US dollar means there will be no beneficial effect on its full-year earnings and minimal impact on 2016 results, despite current lower crude prices.
Utility company SSE kept its lowered guidance for its results in the current financial year, and said it still expects to pay a dividend for the year that is at least equal to retail price index inflation, continuing that policy in future years as well.
SThree reported full-year revenue of GBP746.9 million and pretax profit of EUR29.3 million.
US earnings later on Monday include Microsoft, Texas Instruments and Sun Bancorp.
By Ian Edmondson; ianedmondson@alliancenews.com
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