The View | Are investors wrong to be so bullish on Europe?
‘The good news is that the European Central Bank appears to be in no rush to tighten monetary policy, particularly given subdued inflation levels in the euro zone’
Last summer, the prospect of Emmanuel Macron and Donald Trump presiding over the annual Bastille Day celebrations in Paris as presidents of France and the US respectively was almost unthinkable.
Yet on Friday, it was the former Rothschild banker and the New York property developer who celebrated the 100th anniversary of America’s entry into the first world war in a sign of the extent to which the political landscape in the leading Western democracies has changed over the past year.
The contrast between the policy agendas of Macron and Trump – the French president is a passionate believer in European integration, defends free trade and wants to liberalise France’s economy, while the reality-television star is a populist-nationalist who opposes globalisation and applauded Britain’s decision to leave the European Union – could not be starker and, in the minds of international investors, is a major factor behind the growing appeal of Europe.
In the most unexpected development in financial markets this year, it is the euro zone that has been ticking the right boxes.
Make no mistake, Europe is flavour of the month with international investors
Political risk, which was weighing on sentiment towards Europe at the start of this year because of fears that far-right leader Marine Le Pen might win the French presidency, is now more prevalent in the United States as evidence mounts that Trump’s family colluded with Russia during last year’s presidential election campaign, severely undermining Trump’s authority and policy agenda and fuelling speculation about his possible impeachment.
