Podemos (We Can) party leader Pablo Iglesias speaks during a news conference in Madrid yesterday. Spain faces a struggle to form a stable government following weekend elections that saw the incumbent conservatives score a win but not gain a majority, tailed by the long-established Socialists and upstart, far-left Podemos.

AFP
London


Spain’s stock market slumped by 3.6% yesterday following an election that has left the eurozone’s fourth-largest economy in political limbo.
Meanwhile other European indices fell into the red in late trading as shares in energy companies tanked as oil prices sank to 11-year lows and the euro climbed.
“Spain’s IBEX stock index dived to its worst day in three months whilst Spanish bond yields spiked as investors reacted to the country’s uncertain political future,” said CMC Markets UK analyst Jasper Lawler.
Spain faces a struggle to form a stable government following weekend elections that saw the incumbent conservatives score a win but not gain a majority, tailed by the long-established Socialists and upstart, far-left Podemos.
“If no consensus is reached amongst the numerous political parties then Spanish voters may have to go back to the polls next year, bringing a period of continued uncertainty that could weigh on Spain’s financial markets.”
The polls cap a year of electoral change in southern Europe after Syriza swept to power in Greece in January and a coalition of leftist parties in Portugal pooled their votes in parliament to unseat the conservative government after an inconclusive election in October.
Jasper said the vote was another sign of anti-establishment feeling in Europe brought on by discontent with austerity policies, and that the experience of Portugal showed that the emergence of a Socialist government in Spain would likely lead to a temporary jump in the government’s borrowing costs.
The euro rose to $1.0921 in foreign exchange trading, which analysts said triggered sales in many shares.
“Today’s session has EURUSD break back above the key upside level at 1.09 but with the dollar weakness came a selloff in stocks towards the end of the session,” said James Hughes, chief market analyst at GKFX.
Paris stocks ended the day down 1.3% and Frankfurt 1.0%. London dipped 0.3%.
Oil prices extended losses yesterday with Brent North Sea crude hitting an 11-year low.
Crude prices continued to slide as an ongoing supply glut showed no sign of easing. Figures Friday showed a rise in the number of US rigs drilling, increasing worries that output will continue apace.
Oil prices have slumped by almost one fifth since December 4 when the Opec oil producers’ group decided against limiting production, despite tepid demand and the supply glut.
Oil has sunk more than 60% from above $100 in mid-2014.
Energy shares fell, with BP down 1.2%, Shell’s A share losing 1.5% and Total dropping 1.6%.
Most Asian markets rose yesterday, although Tokyo gave up 0.4% after Toshiba’s stocks took a battering of nearly 10% following a weekend report in the leading Nikkei business daily that it would likely record a fiscal year net loss of about $4bn.
In a statement after the markets closed yesterday, Toshiba said it would post a record ¥550bn ($4.5bn) annual loss.
The 140-year-old company was this year hit by revelations that executives systematically pressured underlings to inflate profits in a years-long scheme to hide poor results.
Wall Street stock indices showed modest gains in midday trading as investors went bargain hunting following two losing sessions.