The surprisingly sharp swing to the far-right in the first round of French National Assembly elections was replaced by an equally unexpected surge in favour of the far-left in yesterday's second vote. The turnaround leaves veteran extremist Jean-Luc Mélenchon's Popular Front alliance comprising his own radical France Unbowed, the Greens, Socialists, Communists and Trotskyists as the biggest grouping. Their platform includes unwinding President Macron's pension reforms and refusing to comply with the EU's borrowing rules. President Macron's centrists came second and Marine Le Pen's National Rally, the big winners last time, only third.

However, Popular Front ended well short of a majority leaving France facing a hung parliament. Moreover, trying to secure a stable coalition government will be far from easy and any arrangement will come under extreme pressure once new budget negotiations begin.

For financial markets, Sunday's results could have been a lot worse but they leave the Eurozone's second largest member state facing potential fiscal policy paralysis at a time when it has already been cited under the EU's excessive deficit procedure. Investor worries about the region's lack of budgetary discipline could yet come back to haunt the euro.

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