How did the left's victory in France resonate with the markets?

In the French parliamentary elections, the left-wing alliance came first, while the failure of any major party to win a majority highlighted the key parliamentary scenario. According to strategists, the failure of Le Pen’s party to fall short of expectations and the failure of the left to form a government on its own could have positive consequences for markets. Although the surprise victory of the left may cause a sell-off in French assets in the short term, strategists believe that markets may view the emerging political picture positively in the medium term. Evercore ISI Strategist Krishna Guha, who assessed the election results, said, “With the elimination of risks stemming from the National Rally party and the failure of the left to win a majority, we see the outcome as market-friendly. These parties were unable to achieve the majority that would fulfill their promises.” Barclays European Equity Strategist Emmanuel Cau also noted that Macron’s party did better than expected, and noted that Macron would form a broad coalition, which could be viewed positively by markets. TD Securities Strategist James Rossiter said that with the key parliamentary scenario, the probability of the French-German bond yield spread exceeding 80 basis points has increased, and that the possible increase in the country's debt profile will not support the euro in the coming months. JPMorgan Asset Management Strategist Vincent Juvyns also thinks that the bond yield spread with Germany will increase in the coming weeks. According to the strategist, uncertainty in the financial position could widen this gap even further.