Election results give investors rude reality check
The sharp market decline stems from a fear that a stable government cannot be formed even though the polls predicted a stalemate all along
Assessment
Investors priced in a stable outcome and got a hung parliament instead. The market's sharp drop reflects worry that coalition talks will drag on, delaying economic decisions. Polls signaled a stalemate, yet the selloff shows markets hoped for a surprise. Watch for signals on which parties can form a working majority, since prolonged uncertainty will keep pressure on equities.