Skery scratches on the skyline in the Finanzviertel Frankfurt, Germany, on Monday, November 4, 2024. Germany finance minister Christian Lindner, head of the FDP, who called for a position paper on Friday, called for tax cuts and slow approach to emission reductions.
Bloomberg | Bloomberg | Getty pictures
Germany's election result provided optimism for lackluster markets at the beginning of the week, although the question of whether the new government can deliver higher public expenses and can restart the economy.
Frankfurt Dax The index won 0.6% on Monday and exceeded a flat Great Britain FTSE 100 and 0.78% loss for France CAC 40Was only slightly changed during the euro compared to the US dollar and the British pound and the German loan costs.
The voice on Sunday made it possible for the conservative alliance of the Christian Democratic Union (CDU) and the Christian Social Union (CSU). This has set up the CDU CSU candidate Friedrich Merz-Einen rights, Pro-Business politician, who works in the boards of EY Germany and German Stock Exchange.
At a time of the coalition talks and a future in which the support of smaller parties is required to enact promised guidelines, including the reform of the controversial “debt brake” rule.
“I think what the market now sees Michael Field, Chief Equity Strategist at Morningstar, told the CNBC to CNBCS” Squawk Box Europe “on Monday.
A poorer market result could have caused the CDU not to be the level that is needed for the formation of a coalition, which “triggered parties that crawl around and no clarity for business persons, said Field.
The result is positive for the German economy, since a two -party “Grand Coalition” between the Conservatives and the Social Democrats (SPD) now looks like a probable result, a situation that would accelerate the decision -making, said analysts of Danske Bank in a note.
Voters flock to political extremes in Germany, while the centric parties stumble
Regardless of whether it is a two- or three-party coalition that has ruled a smaller player like the Greens in the Greens together with the second-placed AfD party-the main parties are geared towards guidelines, including the distribution of the Energie Morningstar's Field said CNBC with the prices and more into the infrastructure, which “positive operations for companies in the background”.
According to Field, the sectors, including the German car industry, the once poor sector, which was beaten by the competition of the electric vehicle from China, a weak domestic demand, the US tariff threats and the regulation of US tariff threats and regulation .
“The sector is so strongly beaten up … Our attitude is that it doesn't need much to turn this swing and easily switch in the positive direction, and a new government with a mandate to really lower energy prices with the Trying to improve competitiveness in the economy could really give this sector the booster that it urgently needs in this phase, ”said Field.
The largely overlooked supply company is another area that can benefit if the government eliminates guidelines such as upper energy price and consumer energy taxes that only have limited market returns.
The chairman of Siemens Energy, Joe Kaeser, said on Monday that the government needed a long -term agenda to restructure Germany over the next five years. Such an agenda would have to be on the economy, infrastructure, energy, education, innovation, restructuring of the pension system and the regulation of the government and government reform control.
Arnd Franz, CEO of the car participant Mahle, said CNBC that the manufacturing trade urgently needed measures against taxes, energy costs and flexibility of the labor market.
On Monday, Citi analysts emphasized that “the political landscape after the choice depends on the form of the coalition government that still has to be formed”.
The highlighting of the market effects that smaller parties could have, they said that the participation of the Greens in a coalition would be positive for construction companies that would produce heating and cooling devices, since this would reduce the likelihood of abolishing subsidies and mandates for retrofits of the heat pump.
Citi -analysts also said that they had “seen limited [medium-term] The CDU platform quotes the risk of the German Onshore Wind auction regime that is time to “develop grids, storage facilities and all renewable energies”.
“This does not seem to imply important steps that aim to hinder the development of wind power” Nordex And Vestasthey wrote.
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The most important questions that remain the markets include whether the government will be able to regain the economy into growth, to rebuild weak business and consumer mood and to increase the financial expenditure by including the rules anchored in the constitution that restrict how much debt the government can take over. The latter point has moved a broader focus in the past few weeks when the European nations discuss their defense spending in response to the Russia Ukraine War and the tensions with the United States,
“The most important end from market perspective … is the fact that the three establishment parties (CDU/CSU, SPD and the Greens) do not claim the two thirds of the seats that are necessary to change the constitution” Team said on Monday.
The passing reform therefore has no clear way, since the AfD removal of the debt brake is opposite, and the left-wing mortal left is open to contradiction to the SPD and against the armament of Ukraine.
“The end result is that yesterday's election result did not lead to a clear way to the constitution in order to enable a step change in state expenditure,” said Rabobank.
They added that the German and regional growth prospects “still” remain dark “in the absence of a dramatic fiscal change.
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