Jean-Luc Mélenchon has unexpectedly been gaining ground in the run-up to this Sunday’s French elections. So much so that some experts believe it’s possible the second round will consist of extreme right candidate Marine Le Pen versus Mélenchon. But Fidelity’s Nick Peters still believes the most likely scenario is a second round face-off between Le Pen and centrist Emmanuel Macron.
The markets are beginning to reflect the “doubly” nerve-wracking effect of the fact that there are two electoral risks in France. It’s not only Marine Le Pen now; Jean-Luc Mélenchon is unexpectedly gaining ground.
French elections will likely serve as a way to take the populism temperature, as well as being the next step towards de-globalisation. As the Dutch general elections showed, the populist drive may prove to be not as strong as anticipated by the polls. But most of the media is presenting the French elections in this way. Furthermore, it has to be considered the fact that the pollsters underestimated the force of populism last year in the UK.
Today the Dutch will hold parliamentary elections. The importance of the results in Holland has not so much to do with the eurosceptics’ access to the country’s government being blocked by the rest of the parties. But rather its interpretation as being key to the upcoming French elections, something which many analysts believe is erroneous.
There is an increasing risk in French politics that Marine Le Pen will be victorious, which is fuelling a rise in the differential between the German and French bond to a four-year maximum. The markets are increasingly more sensitive, and it’s not just France. There are no political candidates left who do not pose a threat.
AXA IM | We believe elections in the coming weeks is quite unlikely, for three reasons. First, all parties except M5S (Five Star Movement) have little interest to go through early elections, as voting intentions polls show that “classic” right and left-wing parties would all lose a substantial number of seats in Parliament to the M5S and the Northern League.
Francesco Saraceno | François Hollande will not seek reelection in May 2017. This is rather big news, even it if was all too logical given his approval ratings. But what went wrong with Hollande’s (almost) five years as a President?
Two founding member countries of the European Union are really in a bad way: France and Italy. Both are threatening to turn this giant with feet of clay upside down, when it still doesn’t know how to deal with Brexit or the unknown elements which Trump has in store in “his” new world order.
Many take comfort from the prospect of higher inflation and rising interest rates driven by the fiscal stimulus the President-elect Trump promises to deliver. This will push the dollar up, endowing European exports with increased competitiveness. Yet the currency tailwind expectations might prove short lived as current debt levels curb any significant public deficit-led expansion.
In the wake of Trump’s win there has been are record inflow of funds into the US stock market and a heavy outflow from bonds and emerging markets. Over $30 billion went into the US equity market in the week of November 16th, according to data published by EPFR Global.