While the melt-up in equity prices has likely given some investors the impression that stocks are impervious to risk today, one risk that will surely get the markets attention if it materializes is the risk of a euro breakup. MarketWatch has the story.
First there were “Grexit” fears, then the “Brexit” shock and now investors have started to brace for “Frexit”.
The latest of the exit scenarios to spook financial markets, the risk of France leaving the eurozone has heightened in recent days after far-right candidate Marine Le Pen last weekend launched her presidential campaign with a hardline speech on immigration and globalization.
Her bid to become the next French president has for long been discounted, but as a scandal has surrounded the campaign of conservative candidate François Fillon, Le Pen is seen as a serious contender for the position.
“The French presidential candidate, Le Pen, has managed to create a stir since putting herself forward and vocalizing her desire for a Frexit,” said Fiona Cincotta, market analyst City Index, in a note.
“The current thinking is that a first round win for Le Pen is a very real possibility, however, political analysts believe a second-round win for her would be an enormous challenge,” she added.
In the French election system, a candidate needs to win a majority in the first-election round — set for April 23 — to secure the presidency. Le Pen is currently leading the polls for the first round, but is poised to fall short of winning an outright majority. That would put her against the second-most popular candidate in a runoff election to be held on May 7.
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