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LONDON (Reuters) - Voters are heading to the polls in the Netherlands, the first of at least three major European elections where anti-immigrant nationalists are seeking to make breakthroughs.
Although Geert Wilders is unlikely to find anyone willing to partner him in a coalition, a strong performance will underline how much his country, a prosperous place which once prided itself on its tolerance, has changed. That in turn could be a boost for the prospects of National Front leader Marine Le Pen in France’s presidential poll, the first round of which is now just over five weeks away. In September it is the turn of Germany’s AfD, although currently their support is waning due to leadership snafus and other problems.
Even Europe’s mainstream leaders now often display a harsher, more authoritarian bent. Angela Merkel’s chief of staff Peter Altmaier has said in an interview out today that he would not rule out a total ban on Turkish politicians campaigning in Germany. His reasoning appears to be that allowing Turkish political campaigns could sully Germany’s reputation as an “exemplary” constitutional state. Could it also be that this plays well to certain German voters in an election year? This story clearly has a lot further to run.
A survey out overnight shows support for Scottish independence has never been higher – at 46 percent – but adds the interesting twist that Scottish Euroscepticism is also on the rise. While Scottish voters backed staying in the EU by a strong 62-38 in last year’s referendum, a surprisingly high number nonetheless want the EU’s powers reduced. The ScotCen concludes that ultimately, the commitment of Scottish voters to the EU might therefore be too weak to turn a new vote in favour of independence.
As the Dutch electorate and Federal Reserve policymakers prepare to vote, financial markets have paused rather than retreated. A slight pullback from recent highs on Wall St and European stock markets on Tuesday has been followed by a relatively flat session in Asia overnight. The dollar is fraction weaker against the euro and sterling, with 10-year Treasury yields hovering about 2.60 percent and Brent crude firmer above $51.
Snowstorm or not, rarely has there been so much certainty about the outcome of a Fed policy meeting – a quarter point rate rise is now expected by all economists polled and futures markets are more than 90 percent priced. With three hikes now already priced into futures for 2017 as a whole, it’s hard to imagine Fed chief Yellen can be much more hawkish than that at this juncture. So perhaps the market risk is that she reverts to a softer tone than market pricing assumes to accompany the actual rate hike itself.
Dutch polling stations close at 2000 GMT, meantime. While exit polls will give indications after then, it could be days before final results are through. For most investors, the main impact of the results will be to give an indication of right-wing populist support in Europe right now ahead of the more market sensitive French presidential elections and will also provide an important test of opinion poll accuracy.
Dutch Prime Minister Rutte is marginally ahead of Geert Wilders’ far right Freedom Party in the latest polls. But even if Wilders won most votes, he’s highly unlikely to be able to form any governing coalition. And even if he did, tabling a referendum on European Union membership would still require an unlikely parliamentary majority first.
Sterling’s slight recovery from eight-week lows against the dollar comes as Prime Minister May declined to trigger Article50 negotiations on Brexit on Tuesday as some has expected, but with the latest polls showing strong support in Scotland for independence after a request for another referendum on secession. Attention may turn back to the economy today however, with the release of UK jobs and earnings numbers amid some concern that wages are not keeping pace with inflation and consumption is waning as a result.
German finance minister Schaeuble presents his draft 2018 budget to parliament, meantime, and U.S. CPI inflation numbers will set the tone for the Fed decision later. European stock markets are set to open slightly higher this morning.
Editing by Dominic Evans