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It feels like an age since investors have emerged from the other side of a major political vote and said “Well, that played out as we expected”. So merci beaucoup, France.

France’s presidential election looks set to be contested by Emmanuel Macron and far-right leader Marine Le Pen after the first round of voting on Sunday.

Mr Macron, an independent centrist, emerged as the front-runner with 23.8 per cent of the vote ahead of Ms Le Pen, the far-right leader, with 21.7 per cent, according to French interior ministry figures based on 94 per cent of votes counted.

The market reaction has panned out as many expected, with the euro strengthening and demand for havens like gold and the yen waning. The single currency was up 1.1 per cent at $1.0847, but had rallied as much as 2 per cent to $1.0937.

Here is a round-up of what analysts and economists have said about the Macron-Le Pen head-to-head.

Ray Attrill at National Australia Bank said:

The certainty of a Le Pen/Macron one-two, with Le Pen not scoring much more than pre-election poll predictions of the low to mid 20 percents, means markets are happy to buy what they see as the fact – that 39 year old Emmanuel Macron will be confirmed as the next president of the French republic in two weeks’ time.

Jordan Rochester at Nomura is of a similar view and said the first round of results from the election “threw the market no surprises”, with Macron coming in first ahead of Marine Le Pen:

But as Ms Le Pen has a 25% or so polling deficit to Mr Macron for the second round in two weeks’ time (which is more than three times the typical margin of error) the market will likely fully price in the outcome of the second round today in favour of Mr Macron.

This matters as the market has embedded a risk premium in both EUR and OATs for some time now heading into this election. We expect that premium to nearly completely come out of the market pricing and this should see EUR/USD finish above 1.09 on the day and we expect this to continue and are entering a long EUR/USD position.

Sebastian Galy at Deusche Bank also said the market was betting on the prospect of Mr Macron pipping Ms Le Pen. He said of the likely market moves:

Steeper Bunds, lower OATs give EURUSD mechanically a boost likely in the 1 to 2% region. Later on, the safe haven bid should leave the US Treasury market stabilizing the top side in EURUSD. As credit risk fades in the Eurozone, it should attract increased flows in its cheaper equity market giving EURUSD some support.

OATs , or Obligations Assimilables du Trésor, are French government bonds. Bond yields move inversely to price.

Timothy Graf at State Street Global Markets commented:

With Macron heavily favoured in head-to-head polling against Le Pen, it seems most likely that a potential Le Pen victory – priced in over recent weeks – will recede between now and the run-off. As volatility subsides, spreads between French and German yields should narrow and we look for the euro to build on its recent stability against the dollar.

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