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European stocks climb after Swedish election relief

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European stocks climb after Swedish election relief
File photo of the Stockholm stock index. Photo: Stina Stjernkvist/TT
15:39 CEST+02:00
Investors appeared more relieved about the dampening prospects of a 'Swexit' than concerned about political deadlock in Sweden.

European equities rose on Monday as the far-right failed to make as large gains as expected in Swedish elections.

Stockholm's benchmark OMX 30 index of major companies added 0.4 percent in value, while the Swedish krona steadied.

There were also similar gains for Frankfurt and Paris indices after the Swedish vote, which once again exposed simmering tensions over immigration in the European Union.

London stocks rose as official data revealed that the UK economy bounced back with 0.3-percent growth in July from the previous month, despite Brexit concerns.

'Swexit risk is low'

As expected, neither the centre-left nor the centre-right bloc obtained a majority in Sweden's legislative vote.

While minority governments are nothing new in Sweden, it has left the nation's Social Democratic Prime Minister Stefan Löfven with the prospect of lengthy talks to form a new coalition administration.

The far-right Sweden Democrats meanwhile solidified their position as third-biggest party, albeit with a lower score than they had expected.

The vote has dented the prospect of a so-called 'Swexit', or Swedish exit from the European Union, following Britain's shock 2016 Brexit referendum to leave the bloc.

"The risk of 'Swexit' is low," said Robert Bergqvist, chief economist at banking group SEB.

He added: "Sweden risks becoming a battering ram in an increasingly polarized international debate, and the ability of Swedish political leaders to manage the new challenges is likely to influence what path other countries will choose."

"The Swexit issue is also beginning to draw increasing international attention, especially in the UK, where people see parallels to Brexit."

READ ALSO: The Local's coverage of the Swedish election

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