From Tyler Durden: While some were worried about an “unexpected outcome” from yesterday’s Dutch general election, in the end the country’s center-right Prime Minister Mark Rutte managed to fight off the challenge of anti-Islam, anti-EU rival Geert Wilders to score an election victory that was hailed across Europe on Thursday by governments facing a rising wave of nationalism.
Rutte received congratulations from European leaders including German Chancellor Angela Merkel, who faces a strong Social Democrat challenge in a September election and has shed some support to an anti-immigration party, Alternative for Germany, which is set to enter the federal parliament for the first time. Merkel told Rutte: “I look forward to continuing our good cooperation as friends, neighbors, Europeans,” her spokesman said. While Rutte won fewer seats than in the last parliament, he still declared it an “evening in which the Netherlands, after Brexit, after the American elections, said ‘stop’ to the wrong kind of populism.”
The vote result was a disappointment for Wilders, who had led in opinion polls until late in the campaign and had hoped to pull off an anti-establishment triumph in the first of three key elections in the European Union this year.
The market reaction reflected that accordingly, with the euro climbing to highest in more than a month, the Euro Stoxx 600 index up 0.7% at 377.6, DAX just shy of all time highs, and the France-Germany 10-year bond yield spread sliding as low as 59 bps. Furthermore, as noted earlier, the Le Pen win probability implied from betting odds fell to 29% following the election outcome:
The result was also a major relief to Wall Street analyst, as demonstrated by the following excerpts
Olaf Van Den Heuvel, chief investment strategist at Aegon Asset Management, in an interview on Bloomberg TV
Bruno Colmant, head of macro research at Degroof Petercam, by phone
Stephane Barbier de la Serre, strategist at Makor Capital Markets in Geneva, by phone
Stephane Ekolo, chief European strategist at Market Securities, by phone
Simon Wells, chief European economist, at HSBC, in note
The Vanguard FTSE Europe ETF (NYSE:VGK) was unchanged in premarket trading Thursday. Year-to-date, VGK has gained 6.45%, versus a 6.90% rise in the benchmark S&P 500 index during the same period.
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