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France's election has the ability to rock wider European stocks, Citi strategist says

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The stock market has not priced in a far-right or far-left majority, according to Citi.

The tax and spend plans of both the hard-right Rassemblement National party and the left-wing Nouveau Front Populaire coalition are a key cause of concern over future bond market volatility.

"Our model suggests that the market is pricing in something between a benign outcome and a gridlock ... not completely, but we are a few percentage points away probably from fully pricing the gridlock," Beata Manthey, the bank's head of global equity strategy, told CNBC's"Squawk Box Europe" on Friday.of both the hard-right Rassemblement National party and the left-wing Nouveau Front Populaire coalition are a key cause of concern over future bond market volatility.

"The outcome is still quite unclear, we only have polling for the first round of the election. So we'll know much more on Sunday evening," Manthey said. European stocks are trading close to a 40% discount to the U.S., a"huge" gap compared to a historical average of around 15-20%, she said.

 

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