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Predictions from Wall Street, Goldman Sachs, Citi, SocGen


Wall Street expects major market disruption as French voters vote Sunday.

Timothy A. Clary – Afp | Afp | Getty Images

French voters are heading to the polls this Sunday in the final round for a closely contested presidential race, between Marine Le Pen (the incumbent) and Marine Macron (the rival).

The leader of Macron’s centrist party was seen leading against his far-right rival Friday, as they face another round of the 2017 tete a-tete.

This weekend, the last day of campaigning is before this weekend’s second-round election. polls showedMacron leads Le Pen by 57.5% to Macron’s 42.5%

Wall Street believes that the election will be a difficult one, given the renewed political and economic pressures in Europe.

We take a look below at predictions made by major banks.

Goldman Sachs

Goldman Sachs is backing opinion polls and citing 90% chance of Macron winning.

Should the incumbent succeed, investors can expect continuity within markets — even as Macron seeks to revive his reformist agenda. According to a Thursday research note, such reforms were already well-informed in market forecasts.

Markets could experience a surprise if Le Pen wins, however. This is due to growing uncertainty about France’s EU and domestic policies.

France’s electoral system dictates that the president is largely governed by the parliament. Legislative elections in June will determine who the ultimate winner is able to govern. With little support from parliament, Le Pen may find itself stuck at an institution impasse.

Goldman stated that this could negatively impact investor confidence. He also said that his markets team would seek to increase sovereign spreads in the event of Le Pen winning.


Societe Generale

“A lot is at stake.”

Others agreed with economists that the final outcome might mark a pivotal turning point in French political life.

“A win for either one would place France on a completely new political, economic and geopolitical trajectory,” ING Economics declared Thursday.

Although a Macron win could lead to more EU integration, winning Le Pen would not be favorable to Europe’s cohesion at a time where it is facing renewed Russian pressure.

France’s role in European integration has been a constant driving force, so a French euroskeptic president could be an unwelcome shock for the European Union. “Not to mention that Le Pen also has been more skeptical of European sanctions against Russia,” the note stated.

Among Le Pen’s priorities are withdrawing France from the integrated command of NATO and seeking rapprochement with Moscow — a clear divergence from the EU’s wider stance.

“This leap into the unknown would probably lead to an adverse financial markets reaction and a very uncertain economic trajectory, weighing on the growth prospects for the coming years,” said ING.

Berenberg Economics says that the conflicting opinions of both sides on domestic policy may have significant implications for foreign and business investment.

The economists said that France and the EU have a lot at stake.