Investors will keep an eye on France's blue-chip CAC40 index, which is down more than 3% this week as well as the banking stocks that have borne the worst of the beating so far.
The bond market reaction will also be crucial after the gap between French and German 10-year yields, a gauge of the premium investors require to hold French debt, widened on Tuesday to around 79 basis points - its largest since April.
We have been here before as France lost its last prime minister, Michel Barnier, to a no-confidence vote over the budget in late 2024, after just three months in office following another snap election in July that year.
Stock futures and currencies have been fairly calm in Asian hours but with the economic calendar light, political and fiscal worries may take centre-stage.
Bond-market ruction is being felt across the globe again with the U.S. Treasuries curve steepening after President Donald Trump on Monday ordered the firing of Federal Reserve Governor Lisa Cook, an unprecedented move that could lead to a legal tussle. Cook intends to file a lawsuit to prevent her firing.
Markets appear to be nervous but have broadly shrugged off the attack on the Fed's independence, with the yield on the 30-year Treasury note not even threatening to breach 5% as would reasonably be expected.
Perhaps investors are being complacent or are waiting for big institutional money to make a shift in moving away from the U.S. assets. As history tells us, it's OK until it's not. Just look at Turkey.
