European capitals have welcomed with relief Macron’s victory in the first round of the French elections. But even if Macron’s lead in the first round seems comfortable enough, support for extremist parties represents more than half of total votes. This could lead to unstability in the country which Macron will need to be able to control.
Centrist candidate Emmanuel Macron was victorious over right-wing candidate Marine Le Pen in yesterday’s French general election, winning 23.9% of vote versus her 21.4%. These results practically guarantee his being elected as the country’s new President in the second round in two weeks time.
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.
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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.
In equity terms, Frexit risk would leave financial entities having to fuel the economy while depositors would sell francs and buy euros. Obviously the loss in the lending margin would be a huge multiple of the fear spread.
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.
Marine Le Pen is likely to win the most votes in the first round, but she can only count on approximately seven million loyal voters out of possibly more than 46 million in the second round.
Cellnex signs up for two new projects in France worth €854 mn, in line with its strategy for boosting its international expansion. It will now become the second biggest independent towers operator in France.