STOXX Research: Commented By Jan-Carl Plagge, Head Of Applied Research, STOXX - Eurozone Is Catching Up

European stocks wrapped up the first quarter of 2017 by recording significant gains. Especially the major Eurozone economies benefited from reduced political uncertainties after the Dutch election results and polls that do not forecast a realistic chance for French presidential candidate Marine Le Pen, who intends to part ways from the EU. 

Almost five months after his election US president Donald Trump is still moving the markets. His pledges for a corporate tax reform could allow companies to bring back cash being held overseas at lower rates. This is especially for the benefit of companies that generate a substantial portion of their revenues outside of the US such as technology companies. His pro-growth policies to revive US manufacturing and rehabilitate the country’s aging infrastructure added strength to companies that may be involved. 

But next to the immediate impact of political events on stock prices, there are other political measures that could be expected to move markets, in particular in the longer term: As nations are taking actions to combat climate change, there is ever more risk associated with exposure to companies that do not. STOXX launched in 2016 low carbon indices to help investors get exposure to companies with low carbon intensity. A new generation of indices includes only companies that show strong environmental stewardship as they are disclosing particular actions or actively manage climate change.