The first round in the French presidential election was held on the 23rd, with Emmanuel Macron and Marine Le Pen coming out in front, winning 24% and 21.% of the votes respectively. Le Pen is a right-wing candidate from the National Front party who is opposed to the euro and France’s place in the European Union. On the opposite side, Macron, who is currently leading in the polls, is a former investment banker who left the socialist party to found a centrist political party, En Marche!, and supports gobalization and a stronger European economic union.
European markets have seen some dramatic changes in the wake of this first electoral stage. Following Macron’s victory France’s CAC 40 index increased by more that 4%, reaching a nine year high. Germany’s DAX, an index consisting of the 30 major German companies, had climbed by 3.3% by the time the markets had closed, while the FTSE 100 in London rose to 7,264, recovering by 2.1% after a drop last week following the announcement of the UK general election.
The euro was also positively affected by the results, jumping a huge 1.5% to a value of $1.09. This increase has meant that the shares of European banks have risen to their highest level since December 2015. French bank, Credit Agricole, saw share prices rise by 10.86% while Barclays in the UK was up 5.4%. However, it is believed by many experts that the substantial increase in euro value, a five-and-a-half-month high against the dollar, may be no more than a one-day wonder, with currency analyst at MUFG Lee Hardman saying, “Now that the initial adjustment higher has taken place, we do not expect the French elections to have much further impact on the euro in the near-term.” While the euro had a good day sterling had its worst day against it since October last year, down 1.3% following the election results.
The effects of the election have been felt outside of the EU as well. Asian markets are experiencing a second day of gains, having reacted quickly to the result of the weekend. The Japanese index Nikkei 225 was up 0.4% on the morning of the 24th, while the Kospi index had increased in value by 0.1%. Closer to home, all three main US share markets have increased more than 1%, with the Nasdaq index reaching a record high, having appreciated by 1.2%, when markets closed on Monday 24th.
After the unexpected results of the Brexit vote and the election of Donald Trump it is unwise for people to take for granted the fact that Macron will win the second round of the election on the 7th May. Nonetheless, recent polls have shown that he is the firm favourite to win, a result which would guarantee France remains a member of the European Union.