European equity markets were also up in early trading, though this arguably also had something to do with the Janet Yellen’s monetary policy statement last night.
A vote for Europe
“The Dutch have voted against populism and in favour of Europe and a sustainable market economy. This may mark a turn in the rising tide that saw Brexit, Trump and the defeat of the Italian referendum,” said Steven Bell, chief economist at BMO GAM.
The fact that Geert Wilders’ far-right PVV only managed to win 20 of the 150 seats in parliament, even four seats less than the score he achieved in 2010 elections, suggests the Dutch vote should be interpreted as a firm choice in favour of Europe. Anti-EU parties, including the obscure Forum for Democracy which won 2 seats, only garnered about 15% of the total vote.
The high turn-out of 81% also suggests universal support among the Dutch electorate for a continuation of the status quo. “The market should take some confidence from the outcome of the Dutch election, as it’s the first sign that mainland European economies may turn against the political parties with more anti-EU policies,” said Sam Twidale, a European equities fund manager at Schroders.
"This may mark a turn in the rising tide that saw Brexit, Trump and the defeat of the Italian referendum” - Steven Bell
Different shades of populism
But does the Dutch result really mean the populist insurgence has now been stopped in its tracks?
It must be noted that prime minister Rutte did better than expected partly because of his defiant stance towards Turkey, in an escalating diplomatic row over the cancelled campaign visit of the Turkish foreign minister last weekend.
In his victory speech, Rutte also did not announce populism as a political ideology. Instead, he just said Dutch voters had “said No to the wrong sort of populism”.
In a sign of increasing polarisation, DENK, a party explicitly targeting Muslim immigrants led by a former Labour MP of Turkish descent, entered parliament for the first time, winning 3 seats.
And the real test for markets will of course be the French presidential elections in April and May.
While the Dutch result is positive for European political stability and is proof anti-EU sentiment in the UK is no reliable indicator of the mood in the rest of Europe, the results of the Dutch elections don’t necessarily give much of a clue on the outcome of France’s presidential race either.
