France election: left-wing coalition set for shock victory over Macron and Le Pen

Even if the group does not have the votes to govern alone, it is likely to demand new spending commitments from Macron to form a new administration.

Since no party is expected to get more than 50 per cent of the seats in parliament, Macron will have to name a prime minister to lead a minority government. That post usually goes to the group that wins the most seats, but the indecisive result could lead to a period of coalition building among parties.

The projections offer some vindication for Macron’s call to dissolve parliament following a crushing defeat to Le Pen’s party last month. He was been widely criticised for the decision after his party finished a distant third in the first round of voting last week in which Le Pen seized the initiative.

France Unbowed leader Jean-Luc Mélenchon on Sunday said Macron must admit defeat and call on the NFP to form a new government.

Macron is currently analysing the latest election results and will wait for the full picture to emerge in parliament before taking the necessary next decisions, the French Presidency said on Sunday. “The president, as guarantor of our institutions, will respect the choice of French people,” the statement added.

The past week has seen frantic efforts to activate the so called Republican Front – an arrangement in which mainstream parties strategically pull candidates from certain races to bolster anti-National Rally votes. Macron’s party withdrew 76 candidates from run-off contests where they had little chance of winning, to avoid splitting the anti-Le Pen vote. The New Popular Front withdrew 130.

Macron dissolved the lower house nearly four weeks ago and called a snap vote after his group was trounced in European elections.

France’s CAC 40 Index has been the worst performer among major European stock indexes since Macron called the snap election last month, while at the peak of the sell-off a metric of bond-market risk soared to its highest since the sovereign debt crisis.

Stocks rallied last week after the first-round vote eased worries about a far-right government, and overall market stress has receded.

Still, the CAC 40 remains roughly 4 per cent below levels seen before the June 9 snap election call. The premium that investors demand to hold French government bonds over German ones stands at less than 70 basis points, below the peak of 86 basis points in the wake of the election call but well above the level of 50 basis points from early June.

Additional reporting by Reuters