French stocks face worse to come from political risk, Goldman strategists say
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jun 18 2024
0mins
Source: CNBC
- French Stocks and Political Risk: French stocks are expected to face more challenges due to political risk, particularly related to the upcoming legislative elections and potential far-right victory.
- Market Impact: The CAC 40 index experienced a significant decline last week following the announcement of a snap election, with concerns about populist fiscal policies and financial instability.
- Bond Yields and Spreads: Borrowing costs rose, and the spread between French and German bond yields widened by 25 basis points, leading to continued pressure on French domestic stocks.
- Stock Recommendations: Goldman Sachs suggests focusing on defensive sectors like healthcare amidst political uncertainty and advises caution regarding small caps and domestic French companies.
- European Valuation Gap: The perception of political risk in Europe compared to the U.S. contributes to a valuation gap, with concerns about market reactions to election outcomes and potential impacts on specific industries.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
