French markets wake up to Le Pen election risk

[April 05, 2022]  By Julien Ponthus and Sudip Kar-Gupta

LONDON/PARIS (Reuters) - French financial markets abruptly acknowledged on Tuesday the risk of far-right Marine Le Pen winning the French presidential elections against incumbent Emmanuel Macron later in April, with sharp losses on Paris blue chip index and government bonds.

Marine Le Pen, leader of French far-right National Rally (Rassemblement National) party and candidate for the 2022 French presidential election, attends an interview with Reuters at her campaign headquarters in Paris, France, March 29, 2022. REUTERS/Sarah Meyssonnier

France's CAC 40 benchmark fell 1.22% while the pan-European STOXX 600 index was broadly flat.

The spread between the yield of 10-year French and German government bonds --- essentially the premium demanded by investors to hold French debt -- surged to 54 basis points, levels unseen since the COVID-19 market crash of 2020.

"Markets woke up on Le Pen", commented Jerome Legras, head of research at Axiom Alternative Investments.

Marine Le Pen, whose presidential campaign has gained momentum in recent days, on Monday captured 48.5% of voter intentions in an opinion poll of a likely runoff against Emmanuel Macron, the highest score she has ever notched.

(Reporting by Julien Ponthus in London and Sudip Kar-Gupta in Paris; Additional reporting by Sujata Rao in London)

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