The results of the elections in France had immediate effects on international markets, but above all on the French Stock Exchange and on the spread of government bonds. Even if the National Rally could obtain a majority in parliament, it is more difficult for him to obtain an absolute majority after the run-off elections next week.
The markets therefore reacted positively. Paris at the opening it recorded a +2.5%, the first truly positive figure in weeks, which partially recovers the ground lost by French bonds. The spread with German bonds also partially returned, falling at the opening to 73 basis points.
The effects of the French election results on the markets
The counting of votes in the first round of the legislative elections in France ended on Sunday evening. After a record turnout for an electoral round of this type, the victory of the far-right party National Rally, widely predicted by the polls, has been confirmed. President Emmanuel Macron’s Renaissance party obtained a result in line with the forecasts but much better than that of the European elections. The percentage of votes of the left-wing coalition was also decent, a few percentage points below Rn.
The probability that Marine Le Pen’s party will obtain a majorityNational Assembly is very high, but these results cast doubt on whether he can govern alone and obtain an absolute majority. The markets have reacted accordingly, rewarding the possible stability that a coalition government could bring.
The Paris Stock Exchange opened with a +2.76% jumpa peak then dropped to around +1.7% in the morning, which however still led to recovering almost all of last week’s losses. The uncertainty brought by the early elections had weighed heavily on trading, also leading to London’s overtaking as the total market capitalization of the lists. The spread with German government bonds also recorded an improvement, going from 79 points at Friday’s closing to 73.
Possible scenarios for the run-offs and triangular elections
Now we will have to wait a week to understand the real results of the French elections. In the single-member constituencies, there will be run-off elections, which could lead to Rn obtaining an absolute majority. Usually, French politics, when faced with a growth in popularity of the far right, has resorted to the strategy of “republican front“.
All the political forces on the ballot formed an alliance against what in the past was called the National Front, withdrawing their candidates who did not come second in the constituencies in which the far-right party had won. This time, however, the tensions between the other parties seem difficult to overcome. THE Republicanscenter right, are very close to Le Pen and they could ally themselves with Rn. The left-wing coalition and Macron’s party campaigned against each other and in a week they will have to overcome very deep divisions to be able to find agreements in the individual constituencies.
The stability gained with this result could therefore dissolve in the second round, above all if Rn obtained an absolute majority in parliament. In that case, France, with a president opposed to its government, risks a period of ungovernability.
