Good Morning! It is Friday again, and we have another week done and dusted! Next week is going to be exciting, not only because the knock-out phase of Euro 2024 starts but also because there will be not one but two elections in Europe. The British and the French are going to the polls.

This Friday’s headlines are:

• Dark clouds gather above the French financial markets 🇫🇷 

• Bill Gates gives some insights about investing in climate 🌍️

• Amazon is delaying its delivery 🚚 

Have a great weekend!

Nils

ELECTIONS
French elections hang as a dark cloud over their own stock market.

What Happened 
President Emmanuel Macron's decision to call a shock parliamentary election has sent shock waves through French markets. Recent polling suggests the far-right Rassemblement National (RN) party could win the most seats in the National Assembly, followed by the left-wing alliance Nouveau Front Populaire (NFP), with Macron's centrist alliance coming third. The uncertainty, combined with the populist policy pledges of both the left and right, has made investors nervous.

Why It Matters

• The French largest stock-exchange, CAC 40, is heading for its worst month since May 2023, with major banks hit particularly hard by the political movements.

• The spread between French and German 10-year bond yields has widened to its highest level in over a decade, suggesting investors see France as a higher risk.

• Both RN and NFP have proposed policies that could significantly increase government spending and debt, including raising the minimum wage, freezing prices of essentials, and reversing Macron's pension age reforms.

• Some analysts warn that if either the hard right or left form a government and push through their plans, it could trigger a "Liz Truss-style" market crisis.

What's Next 
Sunday's first-round vote will be followed by a run-off on July 7. In a best-case scenario for markets, a centrist or technocratic government could be formed, or RN and NFP could significantly scale back their plans if they form a government. However, in a worst-case scenario, the implementation of populist policies could push the spread between French and German bond, potentially forcing the European Central Bank to intervene. France's high debt-to-GDP ratio of 110% and lack of fiscal discipline add to investor concerns. As the French public's attention is divided between the Euro2024 football tournament and the unfolding political drama, the election outcome will be closely watched both at home and abroad.