The results of yesterday’s French Presidential election were broadly in line with the polls, as centrist Emmanuel Macron emerged victorious with 66% of the votes, emphatically defeating the far-right Marine Le Pen.
Although European assets were slightly weaker on Monday morning, they have rallied since the first-round results, as investors anticipated this outcome. He is seen as being pro-reform, which is what the French economy needs, and also his pro-EU stance is seen as avoiding any destabilisation, which would have come with victory by Le Pen.
At first glance the results map below may indicate that the results were overwhelming, however given the very close first round (where the leading four candidates were not far apart) and the remarkably high number of abstentions and spoiled ballot papers in the second round, a degree of malaise remains.
Source: French Interior Ministry
Immediate attention will now turn to the Parliamentary elections scheduled for the 11th and 18th June where the markets expect cohabitation, which we previously discussed.
The focus will also be on how strong a footing Macron's party receives as this will be key for his reform agenda. With no majority then it will be hard to achieve meaningful labour market reform. France is seen as being socially and economically divided and it is still under a state of emergency because of the terrorist threat. This means the question is how long can his honeymoon period as President last? Perhaps he may be fortunate and benefit from what many successful leaders need and that is the luck of being elected at just the right time in an improving economic cycle.