Cheah Yao Ting, global market strategist for Asia Pacific (excluding Japan) at Invesco, pointed out that the results of the European Parliament elections show the rise of right-wing parties, and French President Emmanuel Macron announced that France will hold early elections for the National Assembly. This has widened the spread between French and German 10-year government bond yields to the highest level in over 10 years. Since Macron's announcement of early elections, the French CAC 40 index has dropped by over 4%. French stocks with higher domestic income exposure have seen larger declines. Due to holding significant amounts of government debt and being potential targets for windfall taxes, the banking sector in France appears to be the most vulnerable. The upcoming French elections are full of uncertainty. France carries a heavy debt burden, with government debt accounting for around 110% of GDP. The far-right National Rally party has historically proposed spending plans without funding support, making the prospects for fiscal consolidation uncertain. Additionally, with Standard & Poor's recently downgrading France's sovereign credit rating to AA-, the sustainability of France's public finances is being questioned. Early polling results show the National Rally party in the lead, but not enough to secure an absolute majority. A hung parliament could lead to a political deadlock. Ahead of the elections on June 30, French bonds and stocks may face additional challenges. With the shift towards the right in the European Parliament, there is reason for the market to remain cautious. Investors tend to associate Europe with higher risk premiums. The road ahead for EU fiscal and single market reforms may be more challenging. The commitment in the EU charter to "ever closer union" is also facing stronger opposition from nationalist sentiments, which could weaken efforts to strengthen fiscal and macroeconomic coherence among EU countries. European stocks have performed relatively well, with market reactions being more moderate, indicating less direct impact of policies. Due to the acceleration of economic growth, European stocks are still favored. If market volatility spreads to the entire European market and the euro, it may provide buying opportunities. The likelihood of market volatility spreading to the entire eurozone is quite low. The Standard & Poor's Global/HCOB Eurozone Composite Purchasing Managers' Index (PMI) is at a 12-month high, and the economic surprise index continues to improve. European stock indices are leaning towards value and cyclical stocks, which generally perform better with economic growth rebound. A rate cut by the European Central Bank could also act as a catalyst. While European stocks are generally favored over European bonds, caution should be exercised when selecting European government bonds. For example, despite similar yields on 10-year government bonds between France and Portugal, Portuguese bonds are more favored due to the lower government debt burden compared to France, providing more room for tax increases to support the budget if needed. (Note: Some specific information about market indices and ratings may be subject to change over time)