Following the French election, European equity markets are breathing a sigh of relief. While some structural challenges remain, strong fundamentals point towards continued European equity outperformance, triggered by reduced political tail risks.

According to Matthew Vaight, Manager of M&G Global Emerging Markets, investors are worried that the revelations could lead to political turmoil and jeopardise the government's plans to revive the Brazilian economy...

The second round of the French presidential elections has led to victory for Emmanuel Macron, who achieved more than 66% of votes. This result marks a clear watershed with traditional French politics over the past 50 years, as it is the first time that none of the mainstream parties have had a candidate in the second round of voting.

According to David Lafferty, Chief strategist, Natixis Global Asset Management, the French election represents a win for EU continuity and integration. As Le Pen risk passes, the next hurdle for the EU project is likely to be the Italian banks which remain mired in non-performing loans and poor capital positions with little political stability to address the problem...

The French election result confirms our view that markets until recently had overstated European political risks. Italian political risk and the country's fragile banking system could move back into focus soon, however, particularly if the likelihood of early elections in late 2017 rises.