The recent French presidential elections and the Greek parliamentary elections have sent waves of fear and uncertainty to the markets. France is the second largest economy in the Euro Zone, and along with Germany, is one of the two principle donors for Greece’s bail- out fund. While events in France certainly are of greater importance to market sentiments, the French economy and government is not under any immediate threat despite the change of President.  On the other hand, the Greek economy has been in trouble since 2009 and things have not been getting better despite tremendous amounts of help from the Euro Zone.

As of now Greece is yet to form a coalition government. The incumbent party has lost many seats to either the far right or the leftist party due to the unpopular austerity measures. The opposition parties, which now have substantial seats, have refused to join the government as long as austerity measures are in place. Market response to this news has been negative with the Euro losing to the US dollar and causing equity markets to fall throughout Europe and Asia. Investors are uncertain about the future of the Euro and have caused bearish trend in the markets as they offset their long positions.  Greek stocks have fallen by 3.6 percent, closing at the lowest point in 20 years. Shares in Australia and Asia have also fallen owing to the weakening Euro which has hurt exports.

One of the major consequences to commodity market is the weakening Euro which has caused the US dollar to strengthen largely owing to a stronger demand for US equities and securities. As the dollar increases, commodities such as Oil and Gold are likely to show a bearish trend as uncertainty builds up. The markets are only likely to stabilize once it is clear whether the Greek austerity measures will stay in place or not. If Greece decides to default on their austerity agreements, it is likely to further push the Euro into a deeper crisis.