(CercleFinance.com) – Wall Street should open lower on Friday morning, with renewed concerns surrounding the political crisis in Europe expected to weigh on initial transactions.
Half an hour before the opening, futures contracts on New York indices fell from 0.2% to 0.7%, announcing the start of the session in positive territory.
Until now insensitive to European shocks, American stock markets should be caught up by the political uncertainty which is shaking the Old Continent and which has taken a new turn today.
European financial centers suddenly accentuated their decline on Friday, with the CAC 40 currently losing 2.3% in Paris. In Frankfurt, the DAX lost 1.2%, while the Euro STOXX 50 lost more than 1.6%.
The markets fear that the vagueness surrounding the outcome of the next legislative elections, with the possible coming to power of the RN or the new Popular Front accompanied by a possible budgetary slippage, will lead investors to stay away from French assets.
‘The political instability which is shaking France is a setback for the pro-European consensus,’ worry Barclays strategists.
‘We recommend opting for caution as the uncertainty could persist,’ they warn.
But, beyond France, the current crisis risks deteriorating at any time due to the budgetary difficulties encountered by other countries in the euro zone, Italy in the lead.
The yield on 10-year French OATs eases to 3.10%, but the gap with the German reference rate now reaches 75 basis points, which illustrates investors’ distrust of French debt.
‘It is true that rate spreads have tended to increase, but the risks of a systemic problem appear limited for the moment,’ comments Andrew Kenningham, economist at Capital Economics.
As usual in this scenario, Wall Street financial stocks, the most exposed to the risk of a possible contagion effect, should particularly suffer.
Fears surrounding the political situation in Europe should relegate to the background American economic data which tends to improve.
In terms of indicators, import prices fell by 0.4% in May compared to the previous month, confirming the disinflation movement observed in the statistics published this week.
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