“The results are much better than people had feared, with the Liberals the clear winners and the populists gaining far less than expected,” says Lukas Daalder, Chief Investment Officer of Robeco Investment Solutions.
“Not surprisingly, sentiment in financial markets is positively impacted, with spreads in European bonds declining and the euro rising on the back of the election outcome. Having said that, we should not overstate the impact: the rate hike that the US Federal Reserve administered yesterday has been the more dominant factor in financial markets, lifting both bonds and stocks.”
“Whether a positive election outcome in the Netherlands has any predictive value for, say, the French presidential election is a matter for debate.”
“Dutch voters clearly voted for mainstream pro-European parties, and the new Dutch coalition government will most likely consist of the center-right VVD, the conservative Christian Democrats and the left-leaning liberal D66,” says Robeco Chief Economist Léon Cornelissen.
“This broadly centrist alliance still wouldn’t be enough to get a majority in the lower house of Parliament, so they will need a fourth or even a fifth party to join them. Negotiations for this could easily take months, though Mark Rutte will remain as prime minister as leader of the largest party, the VVD.”
“If this is the case, it won’t impact our view on European financial markets,” adds Daalder. “It would mean that Rutte can continue as prime minister, which means that Dutch politics are a source of stability, rather than disruption.”
Cornelissen says attention will now shift to France and whether the far-right Marine Le Pen can make a real challenge to become President, and also to Italy, where elections are likely this year and the latest polls show that the populist Five Star movement has become the frontrunner.
