French markets wake up to risk of Le Pen presidency

Far-right candidate Marine Le Pen, whose presidential campaign has gained momentum in recent days, captured 48.5% of voter intentions in an opinion poll

French far-right leader Marine Le Pen.

French stocks and bonds fell as markets started to acknowledge the risk of far-right candidate Marine Le Pen winning this month's presidential elections against incumbent Emmanuel Macron.

France's benchmark Cac-40 equity index fell on Tuesday, underperforming the pan-European shares index. 

French government borrowing costs also surged, with yields on 10-year debt up 10 basis points. The spread between the yield of 10-year French and German government bonds — essentially the premium demanded by investors to hold French debt — rose to 54 basis points, levels unseen since the Covid-19 market crash of 2020.

Ms Le Pen, whose presidential campaign has gained momentum in recent days captured 48.5% of voter intentions in an opinion poll of a likely run-off against Mr Macron, the highest score she has ever notched.

The Harris Interactive poll for business magazine Challenges said a Macron victory — which pollsters had considered almost a foregone conclusion — was now within the margin of error. 

"Markets woke up on Le Pen," said Jerome Legras, head of research at Axiom Alternative Investments. French banks Societe Generale, BNP Paribas, and Credit Agricole fell sharply. 

• Reuters