France’s far-right has won the first round of the country’s two-stage parliamentary elections, in a result that suggests it could be the largest party for the first time since the second world war.
Analysts at Deutsche Bank led by Jim Reid wrote: "The first round of the French elections perhaps delivered a slightly less convincing victory for the far-right than final polls suggested and with other parties now seemingly open to form alliances in the second round, this is likely to further reduce the far-right’s chance of an overall majority in parliament."
A hung parliament would make it very difficult for any single party to push through a legislative agenda – particularly given the main left- and rightwing parties’ cordon sanitaire against working with the far right.
The euro has gained against the US dollar. The single currency rose by 0.55% to $1.0771, after hitting its highest level in more than two weeks.
The difference in yield between French and German bonds (AKA the spread) is generally seen as a key measure of risk appetite from investors. On the evidence of this morning, they are hopeful that a hung parliament could reduce any chance of a radical economic agenda in the next few years.
Th spread has narrowed from 79 basis points (0.79 percentage points) to 73 basis points. That comes after the spread surge since 10 June, when markets responded to Macron’s shock decision to call a snap poll.
Futures for the Cac 40 suggest France’s benchmark share index will surge by 3% when it opens at 8am BST. The index on Friday hit its lowest level since January.
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