According to Exit Poll estimates, far-right Marine Le Pen has won the first round of the French parliamentary elections. However, expectations about whether she will win an absolute majority are changing at this point. The current projected distribution of seats in the National Assembly can be found in the following graph. The absolute majority is 289 seats.
Fonte: BBC
The euro is extending early-session gains, with contracts based on the French CAC40 (FRA40) index up 2.6%, as Macron’s Popular Front and Ensemble party are expected to seek alliances in the second round of the French election to try to block Le Pen. That would dilute some of the more radical economic policies that markets feared in the event of a sustained Le Pen victory (windfall tax, dividend withholding, share buybacks in the banking sector, among others).
A second factor that could support a positive market reaction is that France will likely avoid a serious political impasse in which no party will gain any form of majority in the Assembly.
The key factor, therefore, seems to be to verify whether, in fact, the parties opposed to the National Rally will actually succeed in forming the necessary coalition alliances.
FRA40 gains 2.5% at the beginning of the week
French contracts based on the CAC40 (FRA40) opened today with a price gap that pushed the index up by more than 2.5%. Therefore, the FRA40 is testing the 200-day EMA (gold curve on the chart), which is currently the main resistance point on the chart. A possible break to the upside of this area could bring FRA40 to the area connected by the 50-day and 100-day EMAs (blue and purple curves on the chart, respectively). The main support point, however, if the current increases are erased, could be found in the area of last week’s local lows.
Fonte: xStation
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