Hundreds of City workers are to return to their desks on Sunday as banks and hedge funds prepare for the fallout from the french election results.
Markets jumped when frontrunner centrist candidate Emmanuel Macron won the first round of the vote a fortnight ago, and although he was firmly ahead in the polls, Right-winger Marine Le Pen has campaigned hard so investors remained nervous.
Banks including Barclays, UBS, BNP Paribas, Société Générale, HSBC and Bank of America Merrill Lynch are understood to be drafting in staff to their bases in London, Paris and Asia to work overnight to provide analysis to clients and to trade as the result comes in.
Traders, economists and back office staff will be focused not only on the impact on the euro, but on French banks, whose shares benefited from Mr Macron’s victory in the first round.
“Barclays will have extra sales and trading staff in our offices in New York, London and Singapore, in order to help our clients navigate through any ensuing market volatility,” said a spokesman.
Traders have clients who want to put money into French assets and into the euro, but have held back so far until they know Ms Le Pen has lost.
“There may be some scope for a relief rally in the euro early next week” if Mr Macron succeeds, according to Jane Foley at Rabobank.
Nomura’s Jordan Rochester expects the currency to rise by around 0.4pc if he does win, then gradually rise to $1.15 by the end of the year.
However, a narrow Macron victory could also dent the currency, according to analysts at Morgan Stanley. He will need parliamentary support to implement his economic reforms, but he only set up his party, En Marche, last year.
By contrast, if Ms Le Pen wins, analysts expect cash to pour out of France as investors jump ship, fearing her plans to take France out of the euro. That would likely prompt the European Central Bank (ECB) to flood the market with liquidity and ramp up its money printing programme.
“We believe the ECB’s initial focus would be on financial stability, particularly the provision of liquidity to eurozone banks, but also the limitation of market contagion,” said Reinhard Cluse at UBS. He expects the ECB to “wait and see how financial markets and sentiment data develop. However, a prolonged market sell-off or substantial contagion might prompt the ECB to raise quantitative easing [QE]”.
Assuming a Macron win, Mr Cluse expects the ECB to start indicating it plans to cut the QE programme, tapering its purchase of bonds in early 2018.
Mark Burgess, chief investment officer at Columbia Threadneedle, expects a Macron victory to add to the economic recovery taking hold in the eurozone.
“France has had a dysfunctional government for quite some time and I think a resolution to that will be taken as positive,” he said.
Economist Kallum Pickering at Berenberg Bank has high hopes for Macron, noting that Britain and Germany both underwent radical economic reforms in the past 40 years, to great effect. “Germany is now enjoying the golden decade we predicted in 2011, whereas France languishes in self-inflicted misery,” he said