Skyscrapers on the skyline of the Frankfurt Financial District, Germany on Monday, November 4, 2024. German Finance Minister Christian Lindner is the free-market FDP’s method of reducing emissions.
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Germany’s Election results At the beginning of the week, there was an optimistic shock to the bland market, despite whether the new government could offer promised higher public spending and Restart the economy Continue to hang on the main industries in the country that are in trouble.
Frankfurt’s Dax Monday’s index rose 0.6%, surpassing the UK’s fair FTSE 100 France’s loss is 0.78% CAC 40although the euro has driven the U.S. dollar and pound and Germany’s borrowing fees higher.
Sunday’s vote brought victory to the conservative alliance of the Christian Democratic Union (CDU) and the Christian Social Union (CSU). Already set CDU-CSU candidate Friedrich Merz – A central-rights, pro-business politician who serves on the boards of Germany and Deutsche Börse, which almost takes over as the next Prime Minister.
However, there is still some uncertainty that, with a period of alliance negotiations, support for smaller parties will be required in the future to develop committed policies, including reforms to Germany Controversial “debt braking” rules.
“I think what the market is seeing now is some kind of stability, at least we know who won the election, we know who is claiming it, and then we know the league will rely on from here. So I think the market is seeing it as a huge positive ,” Michael Field, chief equity strategist at Morningstar, told CNBC’s “Squawk Box Europe” on Monday.
Worse market results could have lowered the CDU to the level needed to start forming a coalition, Field said, which triggered “messy months of parties scrambling for business.”
The results are positive for the German economy, as the bipartisan “big alliance” between the conservatives and the Social Democrats now looks like a possible outcome, which will speed up decisions, Danske Bank notes.
Whether it is two or three-party leagues, bringing smaller players, such as the Greens – Meers excludes the rule of the far-right AFD party, with major parties consistent in policy, including the launch of the Field of Energy Morningstar Tell CNBC that prices and more investments in infrastructure are being made, the sector will see “positive impact on businesses.”
According to Field, this could provide a boost to sectors including the German auto industry The former department This has been hit by competition from China’s electric vehicles, weak domestic demand, U.S. tariff threats and regulation.
“The industry has been beaten so much…our position is that it doesn’t take much to turn that momentum and move slightly in a positive direction, and there is a new government with real mandate to really lower energy prices, At this stage, any little dedication can really bring huge demand to the industry.”
If the government removes policies with limited market returns, then the government removes policies such as energy price caps and energy taxes for consumers, which is another area that may benefit.
Siemens’ energy Chairman Joe Kaeser told CNBC on Monday that the government needs a long-term agenda to reorganize Germany over the next five years. Such an agenda will require a focus on economy, infrastructure, energy, education, innovation, restructuring of pension systems and “regaining government control and government reform.”
Arnd Franz, CEO of auto parts maker Mahle, told CNBC at the same time that the manufacturing industry needs urgent actions on tax, energy costs and labor market flexibility.
“The post-election policy landscape will depend on the shape of a coalition government that has not yet been formed,” Citi analysts pointed out on Monday.
They said highlighting the possible market impact of smaller parties, and they said that Greens’ participation in the coalition would be an active participant in building construction companies that manufacture heating and cooling equipment, as this would reduce the possibility of abolishing the late subsidies and requirements for heat pumps.
Citi analysts also said they saw “limited (medium-term) risks to Germany’s onshore auction system”, citing the CDU platform as time to “develop grids, storage facilities and all renewable energy.”
“This doesn’t seem to have any major steps designed to hinder wind development,” Citi said. Nordex and Vestasthey wrote.
However, the remaining key market issues include whether the government can Restore economic growthrebuild weak business and consumer sentiment and increase fiscal spending by removing rules in the Constitution, thus limiting how much debt the government can bear. With European countries Discussing to increase their defense spending Response to Russia-Ukrainian War and Tensions with the United States
“From a market perspective, the key result is that … the three institutional parties (CDU/CSU, SPD and the Greens) do not demand two-thirds of the seats required to change the constitution,” Rabobank’s economics research team Zhou One say.
Therefore, there is no clear path to the debt strike through the AFD, and the left-wing Die Link is open to this, but contradicts the SPD and opposes armed Ukraine.
“So, most importantly, yesterday’s election results did not lead to a constitutional change to allow government spending to change a step,” Rabobank said.
Therefore, the prospect of growth in Germany and the region is “remainly frustrating” without a huge fiscal shift, they added.
