Geopolitical events have been reasserting an influence on the markets after a brief honeymoon period with a new U.S. administration for foreign leaders to assess and a global financial crisis to deal with.

Last week we witnessed India’s election igniting a powerful global stock market rally on Monday, May 18 when ruling Congress Party emerged victorious. If the hard-line nationalist main opposition party had won, Indian restraint against Pakistan would not be assured in the event of another large-scale militant attack like the one that took place in Mumbai in November 2008. With the suprisingly strong showing by India’s ruling party, India is staying on the sidelines and looking to the United States to manage Pakistan’s jihadist problems.

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