French Political Risk Unlikely To Fade Quickly

By Sagarika Jaisinghani and Michael Msika, Bloomberg Markets Live reporters and strategists

Sunday’s run-off in the French parliamentary election may bring a bit more clarity on what the next government could look like, but risks to financial markets are unlikely to ease as quickly.  

It appears now that markets’ worst-case scenario — an absolute majority in the National Assembly for Marine Le Pen’s far-right National Rally — could be avoided. The downside to that? Political gridlock, which prevents France from addressing its swollen budget deficit and effectively puts an end to President Emmanuel Macron’s pro-business reforms.