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: France heads to the polls on Sunday. Here’s what markets are expecting.

The world’s betting markets are convinced there’s nothing to worry about in France.

The PredictIt political betting site assigned a 95% probability that Emmanuel Macron will be re-elected as president of France after the second round of elections on Sunday. That’s as recent polls have swung decidely toward Macron and away from his far-right challenger, Marine Le Pen.

Ipsos found 57.5% intending to vote for Macron, versus 42.5% for Le Pen, in a poll that has been similar to other recent French surveys.

Voting ends at 8 p.m. France time, or 2 p.m. Eastern. France doesn’t conduct exit polls, but media outlets project the likely outcome based on projections from the early results out of key swing districts.

What appears to be happening is that Macron is winning over voters who in the first round went for the far-left Jean-Luc Melenchon. Melenchon did not endorse Macron but has repeatedly told his voters that they can’t allow Le Pen to be elected.

A Le Pen victory would send shockwaves through Europe. Though she doesn’t favor a French exit from the euro, Le Pen wants to restrict both the movement of goods and people within the European Union. Unlike Macron who wants to increase the retirement age, Le Pen wants to lower it.

Le Pen also has been friendly toward Russian President Vladimir Putin, and has accepted a loan from a Russian bank, a point Macron repeatedly made in the only televised debate.

Craig Erlam, senior market analyst for the UK and EMEA at Oanda, said there would be a sharp knee-jerk election if Le Pen won, though he noted that similar reactions in the stock market to the Brexit and Trump victories were not sustained.

French President Emmanuel Macron walks towards supporters and local residents of Saint-Denis as part of his campaign trail as he bids for a second term as French President on April 21, 2022 in Saint-Denis, France.

Kiran Ridley/Getty Images

The more likely scenario is that Macron will win a solid victory, but by a smaller margin than his 32-point landslide in 2017.

“A Macron victory, even with a 55-45 or better lead, seems unlikely to equip him with the political capital that he enjoyed five years ago,” said analysts at Citigroup. “While Macron likely will claim that victory gives him the mandate to carry out the pension reform that has become a cornerstone of his platform, given that he had to rely for such victory on the support of voters (and politicians) still vocally opposed to his policies means that he is likely to face a body politic and electorate more reluctant to recognize that mandate.”

France will again go to the polls in June, where Macron might not win a majority in parliament.

The euro
EURUSD,
-0.10%

has been steady this week, and French bond yields
TMBMKFR-02Y,
0.247%

have risen, largely on increased expectations of European Central Bank interest rate hikes.

The French CAC 40
PX1,
-1.42%

stock market index has traded roughly in line with the German DAX
DAX,
-1.75%

over the last week.

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