Introduction: Euro hits a month high after German elections
Good morning and welcome to our comprehensive coverage of our business, financial markets and the global economy.
The euro has gathered this morning as European investors have expressed relief over the outcome of the German election, mixed with fears about the Wall Street recession at the end of last week.
The euro climbed to a month's height after the center right. CDU/CSU The alliance is the top of the German election, with 28.5% of the vote, or CDU leader Friedrich Merz He will be Germany's next prime minister – if he agrees to the Union.
Grand Union – and SPDfell to third place with 16.4% – it seems likely.
It keeps the far right affd (20.8%) opposed.
This marked the highest since January 27th, bringing the euro to $1.0528 for each dollar.
The single currency is also around 83p, which is a little stronger against the pound.
Early Asian deals on German election results euros up. pic.twitter.com/sxegkxhjq9
– 🇪🇺danpopescu (@popescuco) February 24, 2025
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Germany's major stock market index, Dachshundis on track to jump almost 1% at the start of the trade.
Analysts hope that for the German economy, the path to economic recovery will be easier for years.
Kathleen BrooksResearch Director XTB, explanation:
This is a vital election for Germany, and comes at a time of fragile for the country as it fights economic lies and domestic friction. The coalition between the two largest German parties is likely to be the most fruitful in terms of economic policy, as Germany could be more likely to restart economic growth after a two-year economic contraction.
The best way to do this is to ease government borrowing restrictions and help bring the economy back to life. If you have a main party as part of a coalition, this will be much easier.
However, Germany needs to relax its “debt brake rules” before it can fundamentally increase its borrowing. Also, there may not be enough support for such a move.
Holger Schmieding of Belenberg It points out that the AFD (152 seats) and the left (64 seats) have more than a third of the 630 seats, allowing them to refuse to change the constitution.
schmieding This suggests that the “populist fringe” will be given a financial veto.”
The AFD and the left have little in common. However, both these populist protesters are opposed to aid to Ukraine. Perhaps the new government will not negotiate changes to the constitution (or other issues) with the AFD.
It may also be very difficult to agree with the left to the debt brake reforms that are primarily necessary to raise defensive spending that includes more help in Ukraine. The left wants to throw away the brakes on debt. But that agenda (immersing the rich, spending more on welfare, less on defense) is the exact opposite of Mertz's agenda. Never say, but finding room for compromise is a difficult struggle to put it gently.
Our main German election live blog covers today's event in full coverage:
Elsewhere, traders are digesting a decline in stock value on Wall Street on Friday night after the latest survey of buy managers showed slower growth for US companies.
S&P 500 It sank 1.7% on Friday, the worst day of two months.
Agenda
-
9am: Bank of England's 2025 Bear Conference Lieutenant Governor Claire Lombardelli
-
9am: German IFO Business Trust Survey
-
10am GMT: Eurozone inflation in January (final)
-
11am: Bundesbank Monthly Report
-
6pm GMT: BOE's Speech Birkbeck Center for Applied Macroeconomics 'bracing for Turbulence: UK Inflation and Monetary Policy Outlook” Swati Dhingra
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But, they are also concerned that a grand coalition between the CDU/CSU and the SPD would not have a constitutional majority (two-thirds of seats) even if it allied with the Greens.
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Deutsche say:
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This means that any constitutional changes, including to the debt brake, would rely on the support of either the Left or the AfD. We believe this could be seen as a negative by markets in terms of reducing the likelihood of a decisive fiscal regime shift in Germany.
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From a corporate perspective, too, it will hardly be reassuring that the centrist parties lack a constitutional majority.
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Deutsche also predict that the crucial issue of defence spending will play a key role in the upcoming coalition talks:
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In our view, Europe’s challenged security architecture makes it highly likely for CDU/CSU and SPD to agree on higher defence spending in principle, especially if outgoing Defence Minister Pistorius takes a leading role for the SPD in coalitions talks.
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Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
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The euro has rallied this morning as European investors express relief over the outcome of Germany’s election – although this is mingled with anxiety over a slump on Wall Street at the end of last week.
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The euro has climbed to a one-month high, after the centre-right CDU/CSU alliance came top of the German election, with 28.5% of the vote, meaning CDU leader Friedrich Merz will become Germany’s next chancellor – once he has agreed a coalition.
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A grand coalition – with the SPD, which fell to third place with 16.4% – seems likely.
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That would keep the far-right AfFD (20.8%) in opposition.
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This has lifted the euro up t0 $1.0528 against the dollar, the highest since 27th January.
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The single currency is also a little stronger against the pound, at almost 83p.
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Euro up in early Asia trading on German election results. pic.twitter.com/sxEkGXhJq9
— 🇪🇺 🇲🇨🇨🇭Dan Popescu 🇫🇷🇮🇹🇷🇴 (@PopescuCo) February 24, 2025
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Germany’s main stock market index, the DAX, is on track to jump almost 1% at the start of trading.
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Analysts are hoping that the path to economic recovery, after several tough years for the German economy, could now be easier.
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Kathleen Brooks, research director at XTB, explains:
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This is a pivotal election for Germany, and it comes at a fragile time for the country as it battles economic malaise and domestic friction. A coalition between the two biggest German parties could be the most fruitful from an economic policy standpoint, since it may make it easier for Germany to reboot economic growth after 2 years of economic contraction.
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The best way to do this is to ease restrictions on government borrowing to help spur the economy back to life. This will be much easier if you have the main parties as part of the coalition.
\n
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But, Germany would have to relax its ‘debt brake rules’ before it can radically increase borrowing – and there may not be enough support for such a move in the Bundestag.
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Holger Schmieding of Berenberg points out that the AfD (152 seats) and The Left (64 seats) have won more than one third of the 630 seats and can thus veto any changes to the constitution.
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Schmieding suggests this gives the “populist fringe” a fiscal veto”
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AfD and The Left have little in common. But both these populist protest parties oppose aid to Ukraine. Most likely, the new government will not negotiate a change to the constitution (or any other issue) with the AfD.
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Getting The Left to agree to a debt brake reform that is primarily needed to raise defence spending including more help for Ukraine could also be very difficult. The Left would like to ditch the debt brake. However, its agenda (soak the rich, spend more on welfare and less on defence) is the very opposite of the Merz agenda. Never say never, but finding room for compromise would be an uphill struggle, to put it mildly.
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Our main German election liveblog will have full coverage of events today:
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Elsewhere, traders are digesting Friday night’s drop in share values on Wall Street, after the latest survey of purchasing managers showed a slowdown in US company growth.
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The S&P 500 sank 1.7% on Friday, for its worst day in two months.
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The agenda
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9am GMT: Bank of England’s 2025 BEAR Conference opened by deputy governor Clare Lombardelli
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9am GMT: German IFO business confidence survey
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10am GMT: eurozone inflation (final) for Jan
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11am GMT: Bundesbank monthly report
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6pm GMT: Speech by BoE policymaker Swati Dhingra at the Birkbeck Centre for Applied Macroeconomics ‘Bracing for turbulence: UK inflation and prospects for monetary policy’
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Important Events
Germany's mdax The shared index, which includes mid-sized domestic focused companies, is on a trajectory that jumps 1.25% when trading begins this morning. Reuters reports.
Deutsche Bank: Concerns that the Grand Union will not have a constitutional majority
Analysts at Deutsche Bank hope that Germarny will benefit from a “more effective government coalition over the next four years.”
But they also CDU/CSU and SPD There is no constitutional majority (two-thirds of seats). green.
Germany say:
This means that constitutional changes, including debt brakes, will depend on support from either the left or the AFD. We believe this is viewed as negative in the market in terms of reducing the likelihood of a critical change in Germany's fiscal regime.
From a corporate perspective, it is hardly safe to say that centralists lack the constitutional majority.
Germany Also, anticipate that key issues of defense spending will play an important role in future coalition consultations.
In our view, due to the challenged security architecture of Europe, CDU/CSU and SPD agree to higher defence spending, in principle, especially when Defense Minister Pistorius plays the SPD's leading role in coalition consultations. It's more likely.
Euro and European stock futures are on Green this Monday morning to help German elections not bring about a major surprise, reporting IPEK OzCaldeskayaAdvanced Analyst swissquote bank:
Merz'CDU/CSU won the election with about 28.5% of the vote. This is a good result on the right of the center, although slightly weaker than expected. % of votes.
Niejerk's response is a quick rebound for the euro, and stock futures on the hopes of higher spending by the new German government will tackle economic weaknesses over the past few years.
Introduction: Euro hits a month high after German elections
Good morning and welcome to our comprehensive coverage of our business, financial markets and the global economy.
The euro has gathered this morning as European investors have expressed relief over the outcome of the German election, mixed with fears about the Wall Street recession at the end of last week.
The euro climbed to a month's height after the center right. CDU/CSU The alliance is the top of the German election, with 28.5% of the vote, or CDU leader Friedrich Merz He will be Germany's next prime minister – if he agrees to the Union.
Grand Union – and SPDfell to third place with 16.4% – it seems likely.
It keeps the far right affd (20.8%) opposed.
This marked the highest since January 27th, bringing the euro to $1.0528 for each dollar.
The single currency is also around 83p, which is a little stronger against the pound.
Early Asian deals on German election results euros up. pic.twitter.com/sxegkxhjq9
– 🇪🇺danpopescu (@popescuco) February 24, 2025
“}}”/>
Germany's major stock market index, Dachshundis on track to jump almost 1% at the start of the trade.
Analysts hope that for the German economy, the path to economic recovery will be easier for years.
Kathleen BrooksResearch Director XTB, explanation:
This is a vital election for Germany, and comes at a time of fragile for the country as it fights economic lies and domestic friction. The coalition between the two largest German parties is likely to be the most fruitful in terms of economic policy, as Germany could be more likely to restart economic growth after a two-year economic contraction.
The best way to do this is to ease government borrowing restrictions and help bring the economy back to life. If you have a main party as part of a coalition, this will be much easier.
However, Germany needs to relax its “debt brake rules” before it can fundamentally increase its borrowing. Also, there may not be enough support for such a move.
Holger Schmieding of Belenberg It points out that the AFD (152 seats) and the left (64 seats) have more than a third of the 630 seats, allowing them to refuse to change the constitution.
schmieding This suggests that the “populist fringe” will be given a financial veto.”
The AFD and the left have little in common. However, both these populist protesters are opposed to aid to Ukraine. Perhaps the new government will not negotiate changes to the constitution (or other issues) with the AFD.
It may also be very difficult to agree with the left to the debt brake reforms that are primarily necessary to raise defensive spending that includes more help in Ukraine. The left wants to throw away the brakes on debt. But that agenda (immersing the rich, spending more on welfare, less on defense) is the exact opposite of Mertz's agenda. Never say, but finding room for compromise is a difficult struggle to put it gently.
Our main German election live blog covers today's event in full coverage:
Elsewhere, traders are digesting a decline in stock value on Wall Street on Friday night after the latest survey of buy managers showed slower growth for US companies.
S&P 500 It sank 1.7% on Friday, the worst day of two months.
Agenda
-
9am: Bank of England's 2025 Bear Conference Lieutenant Governor Claire Lombardelli
-
9am: German IFO Business Trust Survey
-
10am GMT: Eurozone inflation in January (final)
-
11am: Bundesbank Monthly Report
-
6pm GMT: BOE's Speech Birkbeck Center for Applied Macroeconomics 'bracing for Turbulence: UK Inflation and Monetary Policy Outlook” Swati Dhingra
