Wall Street is expected to fall on Friday, and European stock markets are also retreating at mid-session, particularly in Paris, due to the political and economic risk associated with the early parliamentary elections in France.

Futures on New York indices point to a Wall Street opening down 0.75% for the Dow Jones, 0.52% for the Standard & Poor's 500 and 0.32% for the Nasdaq. US indices are consolidating after a fourth straight record close on Thursday for the S&P and Nasdaq.

In Paris, around 11:30 am GMT, the CAC 40 fell by 1.98% to 7,555.19 points, underperforming other European markets. In Frankfurt, the Dax gave up 1.53%, weighed down in particular by the automotive sector. In London, the FTSE lost 0.51%.

The pan-European FTSEurofirst 300 index fell by 1.15%, the Eurozone EuroStoxx 50 by 1.28% and the Stoxx 600 by 0.61%.

Over the week as a whole, the latter, the main pan-European index, is down 1.70%.

In a sign of market nervousness, the "spread" - the yield differential between German and French ten-year bonds - rose to a seven-year high of over 80 basis points.

For Marine Mazet, fixed-income strategist at Nomura, this risk premium will remain in place until the results of the parliamentary elections on June 30 and July 7, which could result in a victory for far-right or far-left parties.

French Finance Minister Bruno Le Maire warned on Friday of the risk of a financial crisis in France if the Union de la gauche or the Rassemblement national were to win, saying that France's debt could not be financed.

Investor concerns range from the risk of a political stalemate to a slowdown in reforms, a possible downgrading of France's credit rating or even a "Frexit". However, Jefferies strategists deemed the threat of a break-up of the European Union "exaggerated".

Meanwhile, the European banking sector (-2.72%) suffered, with Société Générale (-5.55%), BNP Paribas (-4.32%) and Crédit Agricole (-4.80%) falling in Paris. French banks have lost almost $19 billion (€17.8 billion) in market capitalization since last Friday's close, according to LSEG data.


Adobe climbed 14.3% in pre-market trading as the company raised its annual sales forecast amid strong demand for its artificial intelligence (AI)-based publishing tools.


Atos jumps 18.32%. The group announced on Friday that it had received a non-binding offer letter from the French government for the acquisition of its strategic activities.

Volkswagen (-0.66%), BMW (-0.84%), Renault (-2.63%) and Stellantis (-3.07%) are still in the red, with the European automotive index (-1.28%) amid fears of Chinese retaliation following the European Commission's announcement of new tariffs on electric vehicles imported from China.

British property developer Bellway fell back 3.97% after Crest Nicholson (+12.68%) rejected a revised, unsolicited £650 million takeover offer.

H&M rose by 2.01%, UBS having upgraded its rating on the Swedish ready-to-wear group from "neutral" to "buy".


On the bond market, the yield on the ten-year German Bund fell by 13.8 basis points (bps) to 2.358%, while its French equivalent was virtually unchanged at 3.174%. The spread between these two bonds is now over 80 basis points, having widened by around 25 bps in the space of a week. This is the widest spread in weekly terms since 2011, when the eurozone was in the grip of a sovereign debt crisis that led to multiple government and bank bailouts.

"It's really hard to ignore the parallels with the sovereign debt crisis situation of 2011-2012," points out Justin Onuekwusi, Chief Investment Officer at St. James's Place.

"If you go back to that period, very similar themes are at the center of attention: elections, sovereign debt spreads, debt sustainability, with no real sign of what's going to stop this momentum," he adds.

In the U.S., the yield on 10-year U.S. Treasuries fell by 3.8 basis points to 4.2093%.


The dollar advanced Friday by 0.24% against a basket of reference currencies, to a one-month high.

The euro fell by 0.32% to $1.0701, heading for a weekly decline of 1%, the biggest in two months, against a backdrop of political risk in France.

"Emmanuel Macron's party suffered a substantial setback in the European elections, and unfavorable results in the upcoming elections could exacerbate concerns about the country's debt sustainability," writes Erik-Jan van Harn, macro strategist at Rabobank.

The yen fell on Friday to its lowest level in over a month, at 158.25 against the dollar, as the Bank of Japan (BoJ) left its key rates unchanged and announced that it would present a detailed plan for reducing its balance sheet in July.


The oil market climbed slightly, heading for its best weekly performance in two months, benefiting from solid projections for crude oil demand.

Brent crude advanced by 0.18% to $82.90 a barrel, while West Texas Intermediate (WTI) was up by 0.04% to $78.65 a barrel.

For the week as a whole, the two oil benchmarks could gain nearly 4%.


(Written by Claude Chendjou, edited by Sophie Louet)