Far-Right National Rally Party Leads First Round of French Parliamentary Elections

The far-right National Rally (RN) party has emerged as the leading party in the first round of France’s parliamentary elections, according to exit polls. However, the final outcome will depend on negotiations and the run-off scheduled for next week. The euro experienced a slight gain in early Asia-Pacific trading, reaching around $1.0736. The uncertainty surrounding the election and the potential for increased spending by both far-right and left-wing parties have unsettled investors. France’s already fragile finances could be further undermined by such spending pledges.

Various market analysts have shared their perspectives on the election results. Peter Goves, Head of Developed Market Debt Sovereign Research at MFS Investment Management in London, suggests that a hung parliament remains the base case, cautioning against drawing firm conclusions due to the complexity of three-way contests. Fiona Cincotta, Senior Markets Analyst at City Index in London, notes a sense of relief that the election results were not worse than expected. David Morrison, Senior Market Analyst at Trade Nation in London, highlights the need for further information on vote percentages and potential alliances. Michael Brown, Senior Strategist at Pepperstone in London, points out that the market may find solace in the possibility of other parties withdrawing candidates to prevent the National Rally from winning seats in the run-off. Philip Shaw, Chief Economist at Investec in London, emphasizes the lack of clarity regarding seat distribution and the potential challenges of cohabitation between a National Rally government and President Macron. Carsten Brzeski, Global Head of Macro at ING in Frankfurt, predicts high uncertainty in the markets and suggests that a win by the National Rally could be seen as the most disruptive scenario.

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