The risk of a sovereign default in Greece has increased after the anti-austerity Syriza party won Sunday's snap elections, analysts say, noting that anxiety over the possibility that Greece will exit the euro zone will keep global markets nervous.
"A period of uncertainty and heightened market nervousness now seems likely," said Capital Economics Chief European Economist Jonathan Loynes in a note. Syriza's victory "ultimately raises the risks of a Greek exit from the euro-zone," he said, noting "the risks of a re-ignition of the euro-zone crisis have risen significantly."
Greece's left wing Syriza looked set to win at least 149 seats in the 300 seat parliament. Based on a partial count, the party took 36.5 percent of Sunday's vote, nearly nine points ahead of the ruling conservative New Democracy party, according to interior ministry projections.
Markets had priced in a Syriza victory, but not by this margin – "the elections results increase the risk that Greece will default and trigger some risk-off selling across the markets today," said Mizuho senior credit analyst Ryosuke Kaneko, who covers European credit markets.
Stocks in Asia slumped in early trade Monday but managed to regain some ground. Meanwhile, U.S. futures pointed to a shaky start on Wall Street, with Dow futures falling more than a 100 points and the S&P 500 down over 10 points.
"Nobody knows how things are going to turn out," said ING's Chief Asia Economist Tim Cordon.