Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

Markets Calm Amid Election Uncertainty

Published 25/09/2017, 11:13
NZD/USD
-

US equity markets are on course to kick off the week slightly in the red, tracking similar moves across most of Europe and Asia overnight.

While the market impact has been negligible so far, the focus at the start of the week has been on politics after Germany and New Zealand went to the polls over the weekend and Japanese Prime Minister dissolved the lower house of parliament – effective 28 September – and called a snap election. The New Zealand election result has probably had the greatest impact, with the kiwi almost 1% lower against the greenback after neither of the main parties secured a majority, leaving the fate of the future government in the hands of the nationalist NZ First party.

OANDA: NZD/USD

The nationalists also performed strongly in Germany, where AfD become the first far right party to enter parliament since the second world war. While the EU will likely declare the result another victory for pro-EU parties, as it did after the French and Dutch election, the fact remains that nationalist parties are becoming increasingly popular and this result is another sign of this. The EU must work harder to reverse the trend if they want to avoid another exit in the years ahead.

As it is, Angela Merkel’s CDU party will likely go into coalition with the FDP and Green parties, forming what has become known as the Jamaica coalition due to the respective party colours, with another grand coalition with the SPD apparently off the cards. The SPD performed even worse than expected and appeared to suffer as a result of the party’s last partnership with its rival. Still, investors appear confident that coalition talks will go smoothly, although they could take anything from a few weeks to a few months to complete, leaving a small element of uncertainty in the meantime.

As was already widely reported, Japanese Prime Minister Shinzo Abe on Monday dissolved the lower house of parliament and called a snap election, claiming he was looking to seek a mandate to proceed with strong diplomacy. The reality is that Abe is looking to capitalise on his strong performance in recent polls on the back of his stance over North Korea and apparent disarray within the opposition parties. Abe proposed a two trillion yen stimulus package alongside the announcement, a clear sweetener for the electorate ahead of the vote.

Still to come today we’ll hear from ECB President Mario Draghi, the Fed’s Charles Evans and Neel Kashkari and RBA Assistance Governor Michele Bullock.

Disclaimer: This article is for general information purposes only. It is not investment advice, an inducement to trade, or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. Ensure you fully understand all of the risks involved and seek independent advice if necessary. Losses can exceed investment.​

Original post

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.