Despite the developments over the last two weeks investors have been quite optimistic in their attitude to risk. Ukraine, North Korea and Syria are three of the areas investors are choosing not to worry about. They reacted well at Theresa May’s shock announcement of a general election in June, despite not knowing what she intends to do, especially when it comes to the topic of Brexit. Over the last two weeks euro has strengthened against the US Dollar but lost ground against the pound.
The first round of voting in the French presidential election took place at the weekend with a great deal of unease. Emmanuel Macron and Marine Le Pen have it made it through to rounds two without a showdown between two anti- EU extremists. A win for President Macron may already be priced in.
Although the US Dollar performed better over the last two weeks, it was not because investors were concerned about the US economy but rather a lack of interesting results. Retail sales, jobs and inflation fell short of expectations. The White House is still talking about tax cuts, however after the health care bill debacle; the market is waiting for more tangible evidence.