The impending French election has many wondering what it will do to the European Union and global markets. France is at the top of the list of risks that many fear will affect global markets. This election has been viewed as a risk for awhile now, but recently it has been scrutinized more closely. The risk has changed shape as Jean-Luc Melenchon, the far-left candidate has gained in the polls. The first-round vote on April 23 has taken on new meaning as a result because the second round vote could mean picking between two extreme candidates that markets are likely not to like. Both, Melenchon and La Pen want to radically change Europe.
Another risk that has the potential to greatly impact the markets is China. China's 2016 stimulus, import growth, and share of global investment all have the potential to shift the markets. Many worry this growth in China and other developing countries cannot be sustained and when growth stalls, the markets will stall as well. The article points out that, "the French elections could yet upend sentiment and risk appetite. But the longer-term risk to markets lies in whether they are right to be pumped up about global growth."
Source: Wall Street Journal, April 13, Richard Barley
1 comment:
The French election has certainly been very closely watched and highly anticipated, I know I have been hearing terms like "Frexit" and "Grexit" as both France and Greece contemplate the possibility of leaving the EU. I am not too familiar with Melenchon's politics, but at the end of the day, I think if Le Pen were to win the election, France would succeed from the EU and that would be the start of the end of the European Union. China is also an interesting aspect of the changing global economic climate, and I am looking forward to seeing how its economic future will impact both the United States and Europe.
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