Analysts say markets would do best if one of the centrist candidates — former Economy Minister Emmanuel Macron or mainstream conservative Francois Fillon — takes more than 50 percent of the vote, ending the need for a runoff on May 7. But there's very little chance of that happening.
Next best for markets would be that both of those candidates are the choices heading into the second vote. That could ignite a global risk rally, sending equities higher and pushing the U.S. indexes back near all-time highs. But the odds are slim for that as well.
There is little chance such a fractious election would end with a clear-cut outcome, but there are small odds of a worst-case scenario in which the first round could usher in a race between the two candidates markets fear most — the far-right Marine Le Pen and far-left Jean-Luc Melenchon. While there's not a high probability, there could be a panicky sell-off, sending stocks sharply lower and safe haven assets, like Treasurys and gold, higher.
Right now, it looks like it will end up being Le Pen and Macron battling it out in the second round with the latter winning, analysts say.
"There's not a happy market solution," with that outcome, said Marc Chandler, head of foreign exchange strategy at Brown Brothers Harriman.
"All the polls show Le Pen and Macron in the top two, and the polls may differ on how close it is. Investors seem to be going into it very calm." Chandler said that's the scenario he expects, and it's likely the euro would rally on a Le Pen-Macron race.
Citigroup analysts expect Macron to ultimately win, with a 35 percent probability, and they say he would go into the race with a good margin against all other candidates in the second round. Fillon would be second most likely, with a 30 percent probability, and Le Pen's odds are about 25 percent. The analysts see a small 10 percent probability for Melenchon.