As if Brexit didn’t already cause enough volatility in Europe, voters in France will head to the polls on Sunday for another election that promises to have serious implications throughout the continent—and the world.
The French will conduct the first round of their pivotal presidential elections, and the rhetoric that surrounded Britain’s decision to leave the European Union—and the surprise victory of Donald Trump here in the U.S.—seems to have carried over into this campaign.
France’s place in the EU is uncertain, the nation’s economy has been sluggish, and citizens are becoming increasingly frustrated after several recent terrorist attacks. The Socialist incumbent, François Hollande, has failed to reduce unemployment and maintain a sense of safety.
And while the prime minister and Parliament also play an integral role in the French government, Sunday’s elections are being considered a means of gauging the country’s sentiment towards its recent struggles.
When voters step into the polls this weekend, they will choose from a list of 11 candidates; if no one wins a majority, the top two vote-getters will compete in a runoff on May 7.
Out of this extensive list of candidates, a handful have emerged as serious contenders: François Fillon, a conservative from the moderate but right-leaning Republican party; Benoît Hamon, a Socialist whose poll numbers have dropped to the single digits; Marine Le Pen, head of the far-right National Front; Emmanuel Macron, a centrist-progressive independent; and Jean-Luc Mélenchon, the far-left leader of the French Unbowed movement.
Le Pen, who has been called the “French Donald Trump,” has garnered the most international attention. Appealing to the growing nationalist sentiment throughout the country, Le Pen takes a hard-line stance on immigration and terrorism. She’s been critiqued for her opinions on France’s Jewish and Muslim communities, as well as her use of power while serving in the European Parliament, but she remains widely popular among those concerned about a changing France.
Although for entirely different reasons, Le Pen and Mélenchon have both campaigned on renegotiating France’s role in the EU. These candidates have promised to move towards a departure from the bloc—and the euro currency zone—should these negotiations fail.
There’s plenty more at stake here, including France’s relationship with Russia. Mr. Fillon, for example, has said the he will seek to improve relations with Putin.
Le Pen and Macron are slightly ahead in the latest polls, but the race is incredibly tight and the outcome is still uncertain. The results—and any potential surprises—could have an immediate impact on the global markets. Investors should keep their eyes on these ETFs over the weekend:
iShares MSCI France ETF EWQ. This ETF tracks the MSCI France Index, which measures the performance of the country’s large and mid-cap segments. The index covers about 85% of the equity universe in France.
iShares MSCI Eurozone ETF EZU. Keep an eye on this ETF, which tracks the MSCI EMU Index, for reactions from throughout the continent. The index consists of stocks from 11 European countries, including France, Germany, the Netherlands, and Spain. Should a candidate with “Frexit” aspirations do well, there could be volatility here.
CurrencyShares Euro Trust FXE. This ETF, which is intended to provide investors with a way of gaining investment benefits similar to those of holding Euros, could be in for a wild ride if Le Pen in particular performs well.
The French elections are just one of this week’s hottest stories. For more of the biggest headlines, check out the latest’s episode of the Zacks Friday Finish Line podcast:
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