Can A Macron Victory Lead To An Upswing In European Stocks?

While Italy is not scheduled to go to the polls until 2018, Germany’s federal election is slated for September 2017. Incumbent Angela Merkel is running for her 4th term as chancellor but will likely face opposition from candidates in favor of Germany leaving the EU and the Euro currency. As a result, this will be a key election to follow as Germany remains as the critical cog within the overall European Union wheel. While a Merkel loss is not currently expected, should a German referendum ever result in a vote to leave the European Union, the EU would likely not survive longer term. A similar fate for the Euro could follow under such a scenario. That type of scenario would have no historical precedent and thus lend itself to an environment of great uncertainty, and likely periods of volatility, for global investors.

We, at Hennion & Walsh, will continue to pay close attention to all of the key upcoming elections in Europe over the course of the next year. As it stands now, recognizing all of these highlighted possibilities and associated risks, international equities seem to be worthy of strong consideration for globally diversified, growth portfolios given relative valuations and economic growth prospects.

Momentum appears to be on side of international developed market and emerging market equities vs. domestic equities thus far in 2017 as well. Consider the returns for certain geographically representative exchange-traded funds (ETFs) provided in the chart below.

PE Ratios

Source: Morningstar. All price returns are as of May 5, 2017. All returns for periods greater than 1 year are annualized. Past performance is not indicative of future results.

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Disclosure: Hennion & Walsh Asset Management currently has allocations within ...

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