Forecasts from Wall Street, Goldman Sachs, Citi, SocGen

As French voters head to the polls on Sunday, Wall Street is forecasting market upset if far-right candidate Marine Le Pen proves victorious.

Timothy A Clary | AFP | Getty Images

French voters head to the polls on Sunday to cast their ballots in the final round of a close presidential race between incumbent Emmanuel Macron and rival Marine Le Pen.

Centrist Macron took the lead against his far-right opponent on Friday as the pair faced a repeat of their 2017 tete-a-tete.

On the final day of the campaign before this weekend’s second-round vote, polls showed Macron had a 57.5% lead over Le Pen’s 42.5%.

However, as the election comes at a time of renewed economic and political pressures, both domestically and across Europe, Wall Street says the outcome is far from certain.

Here’s a look at some of the big banks’ forecasts:

Goldman Sachs

Goldman Sachs has based opinion polls on Macron’s 90% chance of winning.

Should the incumbent succeed, investors can expect continuity in the markets – even as Macron attempts to revive his reformist agenda. Such reforms are already largely embedded in current market forecasts, the bank said in a research note on Thursday.

However, should Le Pen win, markets could be in for a shock amid mounting uncertainty surrounding France’s domestic and EU policies.

In the French electoral system, the President’s powers are largely dictated by Parliament. The ultimate victor’s ability to govern will therefore be determined by the general election in June, and with low parliamentary popularity, Le Pen could face an institutional impasse.

That could significantly hurt investor confidence, Goldman said, adding that his market team would be on the lookout for a significant widening in government bond spreads should Le Pen win.


While Citigroup’s base case is also in favor of a Macron win, its probability is less clear at just 65%.

In fact, the Wall Street bank said the chance of a Le Pen victory is now “significantly more likely than it was in 2017” given the risks of low turnout and the reluctance of left-wing voters to support Macron.

This could pose downside risks for equity markets, with French banks likely to be hit the hardest.

“A surprise victory by Le Pen and the associated rise in bond spreads would likely put downward pressure on the overall performance of the French stock market,” read a statement on Tuesday.

The euro, meanwhile, would come under pressure from a Le Pen win and is likely to fall to 1.065 against the dollar, the bank said. A Macron win, on the other hand, would offer “slight upside potential.”

Society Generale

For Société Générale, the outcome is similarly unclear, and a victory for Le Pen “cannot be ruled out”.

“The race is very close and the uncertainty remains high. We still see complacency about this election and a Le Pen win would result in a significant re-rating,” the French bank said on Tuesday.

Again, equity markets – particularly eurozone banks and Italian stocks, both sensitive to EU integration – would be hit hardest by a Le Pen win.

The bank also previously identified around 37 French stocks with a market capitalization above €1 billion that could come under particular pressure due to political risks related to social unrest, asset nationalization and EU policies. These include Air France-KLM, Accor and Renault.

In bond markets, meanwhile, the spread between French and German 10-year bonds could widen to 90 basis points before eventually settling in the 60-90 basis point range if Le Pen were to win. If Macron were re-elected, spreads would likely remain around current levels of 45-50 basis points, it said.

“There’s a lot at stake”

Elsewhere, economists agreed the final result could mark a crucial turning point in French politics.

“A victory for either of them would put France on a completely different political, economic, European and geopolitical trajectory,” ING Economics said on Thursday.

While a Macron victory would likely lead to further EU integration, a Le Pen victory would be “unfavorable for the cohesion of Europe” at a time when it is facing renewed pressure from opponents in Russia.

“As France has always been one of the driving forces behind European integration, the election of a Eurosceptic French President would be a rude awakening for the European Union. Not to mention that Le Pen was also more skeptical about European sanctions against Russia,” the statement said.

Le Pen’s priorities include France’s withdrawal from NATO’s integrated command and a search for rapprochement with Moscow – a clear departure from the broader EU stance.

“This leap into the unknown would likely result in a negative reaction from financial markets and a very uncertain economic trajectory, which would weigh on growth prospects for years to come,” ING said.

Meanwhile, the two’s conflicting views on domestic politics could have a significant impact on businesses and foreign investment, according to Berenberg Economics.

“There is a lot at stake for France and the EU,” the economists noted on Friday. Forecasts from Wall Street, Goldman Sachs, Citi, SocGen

Gary B. Graves

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