(Bloomberg) -- The fallout from President Emmanuel Macron’s decision to call a snap election has made French stocks the least popular in Europe, according to a Bank of America Corp. survey. 

Investors were more likely to be underweight French equities than any others in Europe over the coming 12 months, according to the bank’s latest poll of fund managers in the region, a sharp swing from May when it was their top choice. The preference among investors has instead shifted to pro-defensive stocks and sectors.

The views were gathered from June 7 to June 13, encompassing the majority of last week’s drop, when France’s CAC 40 Index fell the most since in over two years and wiped out $258 billion in market capitalization. The gauge extended a rebound Tuesday after rising Monday, when traders weighed assurances from far-right leader Marine Le Pen that she’d work with Macron should she prevail in the elections. 

Bond markets were also calmer Tuesday, after the yield on French 10-year bonds over their German peers — a gauge of the nation’s risk — posted its biggest weekly jump on record. The spread narrowed slightly to around 77 basis points, still hovering near the highest since 2017 on a closing basis. 

“France has turned into investors’ most unloved European equity market,” BofA strategists including Andreas Bruckner said in a note out Tuesday. Last week’s losses erased all of the CAC 40 benchmark’s gains for 2024, after the index scaled record highs only a month ago, and pushed France below the UK as the region’s largest stock market by value.

Investors have recoiled from the prospect that Macron’s centrist, pro-business Renaissance party will lose further ground in Parliament in a two-round vote scheduled for June 30 and July 7.

Still, risks from France’s political upheaval are top of mind for European investors, prompting Citigroup Inc. strategists to downgrade the wider region to neutral. BofA’s survey showed investors have turned less bullish this month on the prospects of further gains for European equities. They remain preferred in a global context, with more investors in the poll overweight on the region than the US.

Barclays Plc strategists, meanwhile, expect price action in European equities to remain “erratic” until the second round of French voting, given the variety of potential outcomes. They said investor concerns include the potential for political instability that makes France ungovernable and the risk of a government that struggles to pass any meaningful legislation to improve public finances.

--With assistance from Michael Msika and Alice Atkins.

(Updates with markets performance in third and fourth paragraphs.)

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