The First Round of the French Legislative Election was held on Sunday and the initial results suggested a clear win for Marine Le Pen’s far-right coalition around her National Rally party with 33% of the vote, edging out the left wing coalition Popular Front (28%) and President Macron’s centrist Together party (21%). This was rougly as we expected two weeks ago.

Markets reacted positively to the result since it appeared that fears over an outright National Rally majority was eased slightly. I think this analysis is somewhat misplaced – but more on that later

All constituencies where neither party gained a majority in the first round now head to second round, where candidates with less than 12.5% of the votes are cut off. This would usually mean head-to-head battles, but this time around we are seeing far more three-way battles than usual.

Three-way battles are clearly the road to a National Rally majority, since their expected 35-40% of the vote in many constituencies for the second round will only be enough if the electorate is split three ways.

Together and the Popular Front are now working to pool their efforts by withdrawing the 3rd candidate in as many races as possible to keep Le Pen from getting a majority in the new parliament. This is going to be tricky since many of the Popular Front candidates are outright communists who will have a hard time drawing votes from more business-oriented centrist voters.