Hollande victory could impact US markets this week
April 22, 2012
"Nervousness about the election is clearly having an effect," he said.
Still, Jeffrey Bergstrand, a finance professor at the University of Notre Dame, said the possibility that financial markets will drive up France's borrowing costs will limit Hollande's ability to sharply disagree with Germany or radically depart from Sarkozy's policies.
"He can't go rogue," Bergstrand said. "There's too much on the line."
The timing of the market's reaction is also uncertain. Most investors expected Hollande would edge out Sarkozy and that the two would face each other in the run-off election, Greenhaus said. Since Sunday's results met those expectations, the initial market reaction may be limited.
One result that wasn't forecast was the strong showing by far-right candidate Marine Le Pen, who ran on an anti-immigrant platform aimed mostly at Muslims. She captured 19.2 percent of the vote.
Those voters may be more likely to support Sarkozy in the second round, rather than Hollande, Bryson said. That raises Sarkozy's chances, Bryson said, "and that's the market's preferred outcome."
A stronger combined showing by Hollande and a far-left candidate, Jean-Luc Melenchon, would have unnerved markets more in the short run, he added.
