The concerns about government transitions explain a lot of today’s sharp fall in European stocks. The French elections continue to cause market jittery because many perceive the opposition leader Hollande as lack of international experience and may reopen the wounds on healing financial system and fiscal compact if elected. The first round results in the French presidential race showed that President Sarkozy was trailing the opposition candidate. In the next two weeks, it is so important to see whether Sarkozy or Hollande could successfully absorb the votes on other candidates in the first round. But the latest polls indicate it remains to be a very tight event.In the Netherlands, Prime Minister Rutte offered his resignation following the withdrawal of support by the far-right party leader in the coalition government over the planned budget cuts to meet the EU target. Political uncertainty has raised the uncertainty over fiscal condition in the country. At this stage, it remains unclear when elections will be held and how parliament can conclude a budget without a government.
