Investors digested the victory of the far-right National Rally party in the first round of Sunday’s legislative elections, which many had already expected.
Marine Le Pen’s National Rally (RN) party and its allies won a historic victory on Sunday, but the final outcome will depend on days of alliance building and next week’s runoff.
CAC 40 futures rose almost 3%, pointing to a sharp rise in the blue-chip index in early trading, while prices for 10-year French government bonds rose slightly , pushing yields down about 2 basis points to 3.272%.
The spread between French 10-year bonds and German 10-year debt narrowed by 7 basis points to 72.8 basis points, poised for its biggest one-day decline since November 2022, but remaining within sight of last week’s 12-year highs above 82 basis points.
The RN and its allies obtained 33% of the vote, followed by a left-wing bloc with 28% and the centrists of President Emmanuel Macron with only 20%, according to official results from the Ministry of the Interior.
“A hung parliament remains the most likely outcome. While the RN could still win an absolute majority of seats in the second round, this now seems even less likely than before. The risk that the united left will take power and implement its expensive program seems to have receded,” said Holger Schmieding, chief economist at Berenberg.
The euro, meanwhile, rose 0.5% to its highest level in two weeks at $1.0767.
