By Dhara Ranasinghe and Saikat Chatterjee

LONDON, (Reuters) – European markets are likely to exhale a collective sigh relief Monday when pro-EU centerist Emmanuel Macron was set to be elected president of France for a second time. He beat Marine Le Pen.

After Sunday’s runoff election, the first projections showed Macron winning between 57-58%. Although such estimates are generally accurate, they may need to be refined as new results become available from other parts of the country.

A Macron victory was most likely to occur, but markets worried about Le Pen’s relatively narrow lead in the polls. Le Pen favours nationalizing key sectors, cutting taxes, and cutting French contributions towards the EU budget.

When the euro trades in Asia, it should get an immediate boost. French and European markets will open lower, at least for now, Monday being expected.

Marchel Alexandrovich from Saltmarsh Economics, London said that “What we’ve learned over the past couple of years was that polls can be good but not totally reliable.” So, while we will likely get a relief rally, it would be a huge upset had Le Pen won.

Investors demanded a yield premium to own French 10-year bonds, compared to European benchmark Germany. This is a crucial barometer of relative risk. It fell to 42 basis points over three weeks on Friday because investors expected a Macron victory.

The French stock market closed nearly 2% lower than the global average and fell 1.8% due to rate-hikejitters.

Although Le Pen has toned down her antieuro rhetoric there were still many initiatives which would have sent Paris into collision with EU partners.

The euro zone should also feel relief from Sunday’s election results.

Kasper Hense (BlueBay Asset Management’s senior portfolio manager) said he anticipated the French/German yield gap moving 10 bps closer. BlueBay Asset Management had also gone short Italian bonds because it believed the markets were too complacent ahead of the election.

He said that although peripheral bonds will face some short-term pressure, immediate relief will prevail in the markets.

Macron will be the first French head-of-state in 20 years to win another term. This promises continuity in Europe’s second largest economy in a period of increased uncertainty, surging inflation, and the possibility of rapid withdrawal of central banks stimulus.

Shares of French banks such as BNP Paribas (OTC:), Societe Generale (OTC:) and Crédit Agricole, which rallied after Macron’s strong showing during Wednesday’s key TV election debate, could also see more gains on Monday.

Seema, principal strategist at Principle Global Investors said that other analysts, such as Seema, believed the attention would soon return to the response of central banks to the soaring inflation.

Sources familiar with the thinking of the European Central Bank told Reuters that officials want to stop bond purchases as quickly as possible and increase interest rates by July.

France’s June parliamentary election will become the main focus. For reforms to be implemented, the president must win a majority of parliamentarians.

The future policies will be influenced by this election. Therefore, investors who have French exposure might wait to take a position.

Is it possible to predict that June’s parliamentary elections will provide the President with a majority to allow him to pursue his pro-business, pro-European and market-oriented policies? Frederic Leroux was a Carmignac member and an investment advisor.

“It is dangerous to accept it as an absolute at this stage.”