How To Trade Europe's Political Risk

By Michael Msika, Bloomberg Markets Live reporter and strateigst

Some calm has returned to markets after the surprise French election announcement and the sudden resurgence of political risk, yet major dislocations in various assets are creating trading opportunities.

Dip buyers are stepping in after some indiscriminate selling which also hit politically-safe European assets including some defensive French equities. Still, the risks have clearly led to some repricing, especially in volatility, which is looking stretched relative to the US.