Relief after the election: "The greatest risk has been eliminated from a financial market perspective"

The financial markets reacted in a friendly manner to the general election on Monday.

The German leading index Dax recorded an increase of around one percent 15,663 points, and the M-Dax of the medium-sized stocks also increased.

Christian Siedenbiedel

Editor in business.

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Above all, a red-green-red coalition was feared by some stockbrokers, as Andreas Billmeier of the investment company Western Asset said.

The fact that it won't come now seems to be the cause of a certain relief in and of itself.

“The election results are received calmly in the financial markets,” said Thomas Gitzel, chief economist at VP Bank in the morning. “A left alliance is ruled out. From a financial market perspective, the greatest risk has thus been eliminated. But it is also clear: A clear break in the previous government work is not to be expected. "And Jens Oliver Niklasch from the Landesbank Baden-Württemberg commented:" From a market perspective, it should be good news that a left coalition is mathematically impossible and consequently as The threat of negotiations between the SPD, CDU, Greens and FDP has been cleared. "Without the Left Party, there would be no majority for tax increases or for new regulations such as rent controls, which is a sigh of relief for many investors," said Michael Holstein, the DZ's chief economist Bank.

There is always someone who doesn't go along with it

Analysts and economists also believe that they can read from the election results that the possible coalitions mean that neither high additional taxation from the left nor a very restrictive policy on government spending from the conservative side is possible, because a coalition partner is always needed who does not take part.

A coalition of the SPD, the Greens and the FDP (traffic light), the CDU, the Greens and the FDP (Jamaica) or the CDU and the SPD, the so-called Grand Coalition (Groko) would also be conceivable.

“Traffic light or Jamaica? The stock exchanges can live well with both possible and probable constellations now. A continuation of Groko would not be a catastrophe for the stock exchanges, ”said Thomas Altmann, fund manager at QC Partners. According to the analysts of the Commonwealth Bank of Australia, analysts at the Commonwealth Bank of Australia write that there will probably still be a certain shift in government to the left.

The greatest risk for the financial markets now lies in the fact that the coalition negotiations get stuck in the “swamp of details”, says Ulrich Kater, Dekabank's chief economist. Otherwise it is an “election result of measure and middle”. There are now neither excessive economic policy swings to the left nor significant tax cuts to be expected. The major tasks of investing in sustainability and infrastructure are common to all conceivable coalitions, even though even more ambitious climate targets were rejected as a result. "The financial markets can live well with this political reorientation," said Kater.

"CDU / CSU will be punished, the SPD will be the strongest party," writes the Metzler bank. Nevertheless, there were first reports on Sunday evening that did not show Olaf Scholz as the beaming winner, but rather as one concerned. The reason for this is an advance by the FDP to hold talks with the Greens in advance, who have rather disappointed. "So Jamaica is suddenly a serious option again, and not just the traffic light coalition expected by a number of augurs," writes Metzler. "The red / red / green alliance, feared by the markets in particular, is out of the question anyway due to the lack of a majority - so it remains exciting."

David Folkerts-Landau, the chief economist of Deutsche Bank, said: “In the coming years, the consequences of the US-Chinese conflict, Brexit and the need to create a stronger EU will require more proactive policies from the next government. This new role, which has long been demanded of Germany by many international observers, comes at a time when the country's economic position is threatened - by unfavorable demographic developments, structural upheavals as a result of digitization and, above all, the great challenge of to achieve climate neutrality in the next two decades. "The new government is thus faced with the double challenge ofto define Germany's new international role and to find the right balance between a market economy and a strong, guiding state. "

"Many investors and entrepreneurs should be relieved that a red-green-red alliance is unlikely to have a majority in the new Bundestag," said Jörg Krämer, Commerzbank's chief economist.

That strengthens the negotiating position of the FDP, without which nobody could form a stable government, if one disregards a grand coalition.

"A left swing in economic policy is off the table," said Krämer.

"But a market-based reform program is also very unlikely because the Greens, as an indispensable partner of any coalition, tick differently from the FDP in terms of economic policy."