The Dutch voters resolutely put a brake on the populism wheel spinning across the globe such as the right-centrist party of Rutte, as election results showed his primary opponent Geert Wilder went up by a sizable margin. The rivalry unfolded in the political race between the liberal and nationalist parties that showed they were both sharing nearly equal chunks of the electorate until the final voting. Rutte received 21.2% of the votes ensuring 33 seats in the parliament, which is down from 5.3% in the past election, while Wilders’ Party for Freedom scored 13.1% votes, gathering 20 seats. The Christian Democrats and D66 were tied behind Wilder with one percent gaining 19 seats each.
The spread of populism was actually defeated in the centre of Europe giving investors relief about the possible Euro breakup along with concerns over the Le Pen’s nationalist party taking reins in France. Both German and France bond yields reversed declines indicating that the risk appetite is rebounding.
Another important event that happened was the FOMC meeting where policymakers decided on a rate hike, sending dovish messages to the market regarding the timeframe for a further increase. Borrowing costs were lifted to 1%, while inflation and economic growth projections warranted only gradual hikes, said FED head, Yellen, fuelling the rally in global stocks and triggering a sharp Dollar selloff. The American currency index plunged 1$ to 100.50 as the FED failed to deliver a bullish message to the markets while the US equities buoyed with S&P closing 0.84% profit and DOW 30 rising by 0.54%. European indices also advanced as the US Central Bank signalled that there is no need to hurry with a tightening, DAX 30 and FTSE 100 both gained 1%.
The Bank of Japan left interest rate untouched increasing the divergence of its policy with the FED, as the fragile and unstable growth of Japanese economy demands extensive support from the Central Bank. The Bond yields remain under control according to the BoJ head Kuroda, while there was no info provided about the timeframe of the economic support, which propelled Yen’s weakening. BoJ economic outlook indicates that tightening the measure remains unlikely this year.
BoE decision is due today, and it is expected that the stimulus will be unchanged as weak Pound fuels inflation growth. As well as, Brexit outcome casts clouds over a further sustainable economic growth. Rate cuts are unlikely to prevent further Pound slump.