French stock futures jump, bond prices edge up after election

FILE PHOTO: Marine Le Pen, French far-right leader and far-right Rassemblement National (National Rally - RN) party candidate, reacts on stage after partial results in the first round of the early French parliamentary elections in Henin-Beaumont, France, June 30, 2024. REUTERS/Yves Herman/File photo

LONDON (Reuters) - French stock futures rose sharply and government bond prices ticked higher on Monday, as investors digested the victory of the far-right National Rally in the first round of parliamentary voting on Sunday that many had already expected.

Marine Le Pen's National Rally (RN) party and its allies scored a historic win on Sunday, but the final outcome will depend on days of alliance-building and next week's run-off vote.

CAC 40 futures rose by almost 3%, suggesting a sharp rally in the blue-chip index at the start of trade, while French 10-year government bond prices edged up, pushing yields down by around 2 basis points to 3.272%.

The gap between French 10-year bonds and German 10-year debt narrowed by 7 bps to 72.8 bps, set for its largest one-day drop since November 2022, but remained within sight of last week's 12-year highs above 82 bps.

The RN and allies had 33% of the vote, followed by a leftwing bloc with 28% and President Emmanuel Macron's centrists with just 20%, official results from the interior ministry showed on Monday.

"A hung parliament remains the most likely outcome. Whereas RN might possibly still win an absolute majority of seats in the second round, this now looks even slightly less likely than it did before. The tail-risk scenario that the united left could take power and implement its costly agenda seems to have receded further," said, Holger Schmieding, chief economist at Berenberg.

The euro, meanwhile, rose by as much as 0.5% to a two-week high of $1.0767.

(Reporting by Amanda Cooper; Editing by Alun John and Stefano Rebaudo)