April 26, 2017 / 08:09 IST
Markets across the globe rallied following a centrist victory in the first round of the French presidential election which lifted risk-on sentiment, as it reduced the risk of Brexit like shock.
After winning the first round of elections, the pro-EU centrist Emmanuel Macron is expected to beat right-wing rival Marine Le Pen in a deciding vote next month.
Several regional markets rose to multi-year highs, while the euro retained most of its overnight gains. Tracking gains in US markets which closed over 1 percent higher, the Nifty rose to a fresh record high of 9,279.80 in morning trade on Tuesday.
“There is a big sense of relief among European investors with French CAC up 4.5 percent, and DAX up over 3 percent. The tail risk of problems with a French exit from Europe is off the table. Mr Macron is constantly predicted to win the second round and he has a pro-reform agenda,” Geoff Lewis, Manulife Asset Management said in an interview with CNBC-TV18.
It was one of those geopolitical events which is now behind us which will act as a booster for riskier assets. This is definitely a win for risky assets, he added.
Commenting on US markets, Lewis said that we still have worries if Donald Trump will be able to push his agenda forward with respect to tax cuts. “There are still things which are ahead of us, but this is still a win for risk assets,” he said.
Commenting on funds Lewis said a new trend is emerging which should benefit emerging markets. “Funds are moving from US equity funds into overseas funds mostly in EMs and Europe. In the longer term, EMs will have better growth prospects,” said Lewis.
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