Here’s what’s important in the business world this morning:
France & Socialism: French President Francois Hollande and the Socialist Party look to take full control of French parliament. In fact, the Socialist Party is “set to win the largest number of seats in parliament, exit polls for the first round of the country’s legislative elections yesterday showed,” according to Bloomberg.
According to the same report, the Socialist Party and its Green and Left Front allies took 46.9 percent of the popular vote nationally.
“The Socialist Party has actually a good chance of winning an absolute majority on its own,” said Dominique Barbet, an economist at BNP Paribas SA in Paris, according to Bloomberg. “This would be helpful in case Hollande decides to deliver some austerity in the near future or, possibly, some structural reforms further down the road.”
A Socialist majority in parliament means that Hollande will have free reign to enact his policies, among them the implementation of a 75 percent income tax rate on anyone earning over $1.3 million.
Italy: Official statistics confirm that Italy's economy contracted by a quarterly rate of 0.8 percent in the first three months of the year, the worst contraction in three years.
The painful recession keeps pressure on Premier Mario Monti's government, which is struggling to fend off the debt crisis and the perception that Italy could be next to seek a bailout following Spain's decision over the weekend to ask for help for its ailing banks.
The ISTAT statistics agency says the contraction is the worst since the first quarter of 2009, when the economy contracted by 3.5 percent. ISTAT forecasts that the Italian economy will contract by 1.3 percent this year, slightly more than the government's estimate of 1.2 percent.
Spain Bailout: Spanish stocks shot up Monday while its borrowing costs fell sharply as investors appeared relieved that Spain has secured a bailout for its banks.
In line with healthy rises in stock exchanges across Europe, the Ibex-35 stock index was up 4 percent about 90 minutes after the opening bell. Bank stocks rose strongly. Shares in Bankia, which had requested (EURO)19 billion in aid to cover its bad loans and assets, rose about 15 percent.
The interest rate on Spanish 10-year bonds - an indicator of investor confidence of how well Spain can maintain its debts - down as much as 8 basis points to about 6.1 percent.
Eurozone finance ministers said Saturday they would make up to (EURO)100 billion ($125 billion) in loans available to the Spanish government to prop up banks laden with non-performing loans and other toxic assets after the collapse of a real estate bubble. Spain has yet to say how much of this money it will tap.
When the bailout was announced on Saturday, Spanish Economy Minister Luis de Guindos said the rescue would not force any new austerity measures on the Spanish government, already struggling to chip away at a bloated deficit in the face of a recession and nearly 25 percent unemployment.
The Associated Press contributed to this story.