Macron-Le Pen duel in French runoff could spark tension in markets, says analyst

Incumbent French President Emmanuel Macron’s lead against Marine Le Pen in the first round of the election came as a relief for foreign investors who have been facing “tension” due to a rise in the far-right challenger’s popularity, a French markets analyst said.

The euro traded higher and the spread between French and German bond yields tightened on Monday after Macron won a larger than expected share in the first round of the French election.

With 96% of the votes counted for Sunday’s (April 10) first round, Macron garnered 27.41% of the votes and Le Pen won 24.03%. Macron will now go into a runoff against Le Pen on April 24.

“We can observe as markets opened this Monday that we are going back to something that is completely normal,” said Francois Chaulet, director and founder of Montsegur Finance. “This means that there was a bit of tension last week, and this tension is dissipating today.”

A Le Pen victory could send shockwaves through France and Europe in ways similar to Britain’s vote in 2016 to leave the European Union.

The first-round result saw Macron record a bigger lead than he managed in 2017 but it was close, leaving the euro just 0.3% higher on the day at $1.0910 EUR=, after it initially rose to $1.0955 overnight then fell to $1.0874.

The French 10-year bond yield was little changed at 1.275%, near its highest level since mid-2015 at 1.296% that was reached on Friday.

The spread between the French 10-year yield and its German peer narrowed by 4 basis points (bps) to 50.2 bps.

Russia’s defence ministry said Ukraine’s government was being directed by the United States to sow false evidence of Russian violence against civilians despite what it cast as Moscow’s “unprecedented measures to save civilians.”

“The United States, which has many years of experience in organising provocations with human victims, continues its campaign to create and promote false ‘evidence’,” the ministry said.