European stock exchanges start up in the aftermath of the political elections in Germany. The EuroStoxx rose 0.80% in the early stages of trading while the FtseMib in Milan was up 0.60% and the Dax in Frankfurt led with + 1%. The result from the German polls offers stability to financial markets. The greatest risk, namely that of the advance of a left-wing coalition, seems completely averted. The operators therefore look to continuity even after Angela Merkel’s delicate exit from the scene. However, it will take time, perhaps months, to find out the composition of the new coalition. “We did not think and we do not think that the coalition talks will be the center of attention of the financial markets, since in both cases one of the former governing parties will be the new leader of the coalition,” said Reto Cueni, Chief Economist Vontobel in a statement.
According to provisional results, Olaf Scholz’s SPD is the first party with 213 seats (25.7%) in the lower house but the chancellery is not at hand. The CDU-CSU group obtained a very negative result, but despite being only 24.1% (200 seats), the leader Armin Laschet has claimed the leadership of the government. Best result ever for the Greens who got 121 seats (14.8%). Only 41 seats for Linke’s former Communists while the FDP liberals took 98 seats. Negotiations will begin today to arrive at the synthesis of the new government. At the moment the so-called “traffic light” coalition with SPD, Verdi and Fdp seems the most probable.
Green titles forward
In Milan, the indices already look beyond the German vote and focus on the day’s movements. The session was dominated by the rise in oil, with Brent from the North Sea rising to 79 dollars a barrel on the highs of the last three years. The oil in Piazza Affari benefited from the trend, with Tenaris (+ 1.5%) and Eni (+ 1.5%) in the lead.
On the contrary, the renewable energy sector is placed on the German market. All the companies with a focus on wind energy and renewable energy rise on the Dax. The sector is driven by the probable participation of the Green party in the new governing coalition. After yesterday’s vote, Die Grüne are the third largest force in the country. In its program, the party is pushing for a stronger climate policy. To benefit from the electoral result are stocks such as Nordex, Siemens Energy, RWE up to the solar park company Encavis, all with increases of around 2% in the morning.
BTP under the lens
The result does not move government bonds which move only slightly upwards. At the start, the yield of the Italian ten-year BTP changed little to 0.77% from 0.787% on Friday. The BTP / Bund spread was stable at 100.4. Caution remains at the fore though. «This election result confirms our caution on the European core rate markets. Not only could the coalition negotiations be lengthy, but financial markets are entering the key phase of normalizing fiscal and monetary policies – says Gergely Majoros, member of the Investment Committee, Carmignac -. Furthermore, economic growth expectations may soon begin to weaken, while inflation expectations may still rise. Overall a difficult situation for central banks and bond investors ».