This weekend sees the culmination of the most important election of 2017 so far, with France, one of the EU’s remaining ‘big two’ economies, electing its new president. But the election won’t just be felt in France; Sunday’s vote has global implications, for equities, indices and foreign exchange markets alike.

What could the repercussions of a victory for either candidate mean for you?

So far, the market has preferred the centrist Emmanuel Macron, a former investment banker who maintains a staunchly pro-EU position. After his first round victory, the Euro rallied to trade at its highest level against the US dollar since Donald Trump’s election victory in November, while the CAC 40, France’s blue-chip index, rallied by almost 4% to trade at its highest level since 2008. His position as an ex-banker would likely see European Banks, including the UK’s own Barclays and HSBC, breath a sign of relief.

His alternative, the right-wing Marine Le Pen, could scarcely be more opposed to Macron’s Europhile views, seeing her labelled as the market-negative outcome. Le Pen, campaigning on an anti-Europe, anti-immigration and ‘pro-France’ platform, has not only said that she would look to enact France’s own EU referendum – dubbed Frexit – but also remove France from the Euro and reinstate the Franc. Not only would this have serious implications for French equities, but also likely the German Dax, Euro and even the UK’s UK Index 100. 

Should she spring a Brexit or Trump-esque surprise, there is a strong possibility we could see indices react with their strongest market move since Trump’s victory in November. The Euro, having surged on Macron’s first round victory, would likely pare those gains, with safe-haven assets such as Gold, Silver and the Japanese Yen likely to benefit.

Whilst Macron has increased his lead in the polls following on from Wednesday night’s TV debate, the key to Sunday’s result could be the voter turnout, abstentions and defections. The 39-year old won the popular vote in the first round, but by the slenderest of margins, while the top four candidates were separated by just 4 percentage points. Voters on the far-left – responsible for 19.6% of the total vote – are unlikely to be wooed by the prospect of a former banker or a far right leader. Where will they go? A low turnout could therefore play into Le Pen’s hands.

Could a Macron victory bring a surge of strength to European indices, including both the French CAC and German DAX, as the Eurozone is delivered from rising EUropean populism?

Alternatively, would a Le Pen win see a day of trading similar to the day after the UK’s EU referendum, in which the country’s blue chip index traded as much as 10% lower? Perhaps even a move of greater magnitude, with so much more than just EU membership at stake for France?

When you come to review your positions on Monday, will your current broker contact you before the market open to make sure you’re aware of the election results and overnight movements in the futures market? Struggling to find an answer? Then why not try an award-winning service, one where you’ll receive research designed to cut through the noise and put you in the best possible position to benefit. Sign up here to receive our no nonsense in-house research and discover how Accendo Markets can help you trade, today.

Aymen Azizi, Trader, 5 May