The non-impact of EU elections on the markets

As London and the US markets were closed on Monday, investors start to digest the results of the European elections. Markets are not expected to be impacted. The advance of right and left radical parties in many countries as well as of the so-called eurosceptics were foreseen, “but also worrying”, according to Spanish analysts at Link Securities.

“These results obviously prove a great disafecction, and sometimes disinformation about the increasing importance of the European Parliament when designing and developing rules that are then adapted to each member country’s law,” they add. However, those parties considered as centrist, coming from popular as well as socialist democrat groups will hold a wide majority in the EU Parliament with 751 representatives, having to reach to agreements as usual. Thus, “from a practical point of view everything will remain the same,” experts conclude.

As Bankinter analysts commented, that influence of nationalist political parties “could tighten the euro, but only transitorily.”

In the UK, the victory of UKIP could force PM David Cameron to take a more distant attitude towards Europe, which also is to weak the sterling pound recent rally. “This could be the perfect excuse for a profit taking”, they comment. Politics may also sligthly erode the peripheral bonds or at least giving them some volatility.