FinancialfocusHub.com
  • Home
  • Crude Oil
  • Cryptocurrency
  • Forex
  • Funds
  • Gold
  • Insurance
  • News
  • Stocks
No Result
View All Result
  • Home
  • Crude Oil
  • Cryptocurrency
  • Forex
  • Funds
  • Gold
  • Insurance
  • News
  • Stocks
No Result
View All Result
FinancialfocusHub.com
No Result
View All Result
ADVERTISEMENT

Germany’s Historic Election Opens Door to Higher Spending

Alice by Alice
2025-02-24
in News
Funds25

Funds25

ADVERTISEMENT

Germany’s crucial federal election has set the stage for a significant shift in fiscal policy, with markets predicting a move towards increased government spending.

Market Reactions to Election Outcome

Following the victory of Friedrich Merz, leader of Germany’s conservative opposition, the euro surged by 0.7% in Asian trading. Merz’s CDU/CSU bloc won 28.8% of the vote, while the Alternative for Germany secured 20.2%. This outcome was expected, with markets reacting positively. Contracts for Germany’s benchmark DAX index rose by 1%, and bond futures saw slight declines.

ADVERTISEMENT

Matt Gertken, chief geopolitical strategist at BCA Research, explained, “For the markets, the outcome is favorable because Germany will still have a centrist government, but with a more pro-business and pro-investment direction.” He also noted that this shift could ease tensions between Germany and the Trump administration over trade and foreign policy matters.

ADVERTISEMENT

Merz’s Push for a Swift Coalition

Friedrich Merz wasted no time after his win, calling for a new government to be formed quickly. “The world won’t wait for us,” he remarked, emphasizing the need for prompt coalition talks. The CDU/CSU’s victory opens the door for a potential two-party coalition, with the Social Democrats (SPD) and other parties potentially joining to form a majority. Such an alliance would pave the way for much-needed reforms and possibly relax the constitutional limit on borrowing, known as the debt brake, which has been in place since 2009.

ADVERTISEMENT

Krishna Guha, vice chairman of Evercore ISI, believes that a two-party coalition between CDU/CSU and SPD, with broader support, would be the best outcome for Europe, Ukraine, and financial markets.

A Potential Shift in Fiscal Policy

Germany has long been known for its fiscal discipline, but with growing pressures—especially from the U.S. to increase defense spending—there are signs that this may change. Before the election, markets had already started to price in the possibility of higher government borrowing, particularly as bond yields on longer-term German securities rose.

The country’s stock market has been buoyed by a surge in defense stocks, particularly Rheinmetall AG, which has seen a 45% rally this year. Analysts predict that increasing defense spending could boost the equity valuations of these companies by 15% to 20%.

Euro’s Performance Amid Economic Uncertainty

The euro has gained about 1.5% in February, driven in part by inflows into German stocks. Despite ongoing concerns about the euro’s long-term weakness, some experts believe the election result could bring positive changes. Dane Cekov, senior macro and FX strategist at Sparebank 1 Markets AS, commented, “If the new government follows through with reforms and takes a more active role in infrastructure and defense, the euro could strengthen.”

However, some uncertainty remains. The euro’s long-term trajectory also depends on whether the U.S. dollar has peaked, with investors scaling back bets on further dollar gains.

The Need for Greater Borrowing

Despite Merz’s claim that loosening borrowing restrictions is not a priority, there are indications that German politicians are acknowledging the need for increased government spending. With some of the lowest borrowing costs in the euro area and relatively low debt levels, Germany is in a position to borrow more to address domestic economic challenges.

Economic Pressures Weigh on Germany

Germany’s economy has contracted for two consecutive years, a rare occurrence since 1950. The country faces numerous challenges, including years of underinvestment, the loss of cheap Russian gas, and a slowdown in China, which has impacted trade. These factors have prompted discussions on how to revive Germany’s economy.

Neil Birrell, chief investment officer at Premier Miton Investors, summed it up, saying, “There’s not a lot of room for disappointment in equity markets at the moment, and this election result could provide a short-term boost.”

Related topics:

  • What Time Is the London Session Forex EST?
  • How Much Money Did Mansa Musa Have in USD?
  • How Much USD Is Printed Each Year?
ADVERTISEMENT
Previous Post

How Much Is Gold in USD?

Next Post

Asian Stocks Fluctuate, Dollar Dips After US Data: Market Update

Alice

Alice

Related Posts

Capital Returns To Us-Listed Chinese Etfs After Sell-Off
News

Capital Returns To Us-Listed Chinese Etfs After Sell-Off

2025-05-16
Trump: UAE, US Agree On Abu Dhabi Buying Advanced AI Chips
News

Trump: UAE, US Agree On Abu Dhabi Buying Advanced AI Chips

2025-05-16
Policy Interpretation | Seven Departments Unveil Comprehensive Measures to Accelerate Sci-Tech Finance System Development
News

Policy Interpretation | Seven Departments Unveil Comprehensive Measures to Accelerate Sci-Tech Finance System Development

2025-05-15
China Expands “Swap Connect” with 30-Year Swaps and LPR Products to Deepen Financial Market Opening
News

China Expands “Swap Connect” with 30-Year Swaps and LPR Products to Deepen Financial Market Opening

2025-05-15
Gold Drops 2% to Below $3200 an Ounce
Gold

Gold Drops 2% to Below $3200 an Ounce

2025-05-15
Small AI Firm Bets $300 Million On Bitcoin And Trumpcoin
News

Small AI Firm Bets $300 Million On Bitcoin And Trumpcoin

2025-05-15
Tariffs Cause ‘lost Year’ For Housing Market, Economist Says
News

Tariffs Cause ‘lost Year’ For Housing Market, Economist Says

2025-05-15
China’s Inclusive Finance: Powering Innovation in the New Quality Productive Forces
News

China’s Inclusive Finance: Powering Innovation in the New Quality Productive Forces

2025-05-14
RMB Strengthens as China-U.S. Trade Tensions Ease
News

RMB Strengthens as China-U.S. Trade Tensions Ease

2025-05-14
Next Post
Stocks7 (2)

Asian Stocks Fluctuate, Dollar Dips After US Data: Market Update

Cryptocurrency9 (2)

Bybit Faces $4 Billion ‘Bank Run’ After Major Hack by Lazarus Group

Cryptocurrency25

Crypto Exchanges Step Up to Support Bybit After $1.4 Billion Hack

Popular Articles

U.S. Tariff Uncertainty Weighs On Infineon’s Revenue Outlook
News

U.S. Tariff Uncertainty Weighs On Infineon’s Revenue Outlook

by Alice
2025-05-10

German chipmaker Infineon Technologies on Thursday reported steady orders but cut its full-year revenue outlook due to uncertainty over the...

UK Economy Poised For Rapid Growth Despite Tax And Tariffs

UK Economy Poised For Rapid Growth Despite Tax And Tariffs

2025-05-15
Dell Price Rises Alongside Secondary Downward Trend Line

Dell Price Rises Alongside Secondary Downward Trend Line

2025-05-10
China Unveils Landmark Insurance Standards for 300 Million Seniors

China Unveils Landmark Insurance Standards for 300 Million Seniors

2025-05-14
Policy Interpretation | Seven Departments Unveil Comprehensive Measures to Accelerate Sci-Tech Finance System Development

Policy Interpretation | Seven Departments Unveil Comprehensive Measures to Accelerate Sci-Tech Finance System Development

2025-05-15
Insurance

What Is Long-Term Disability Insurance? A Comprehensive Guide

2025-05-16
Forex1

What Is A Prop Firm Forex: How Does It Work?

2025-05-12
GOP Rep. Lucas Backs Fed Chair Powell: ‘Excellent Job’

GOP Rep. Lucas Backs Fed Chair Powell: ‘Excellent Job’

2025-05-14

Recent Posts

Capital Returns To Us-Listed Chinese Etfs After Sell-Off
News

Capital Returns To Us-Listed Chinese Etfs After Sell-Off

by Alice
2025-05-16

Major U.S.-listed exchange-traded funds (ETFs) tracking Chinese equities experienced significant inflows in May, rebounding from a sharp sell-off in April....

Trump: UAE, US Agree On Abu Dhabi Buying Advanced AI Chips

Trump: UAE, US Agree On Abu Dhabi Buying Advanced AI Chips

2025-05-16
Crude Oil3

Oil Prices Fall Amid Iran-U.S. Nuclear Deal Uncertainty

2025-05-16
Japan Economy Shrinks Amid Trump Trade War Impact

Japan Economy Shrinks Amid Trump Trade War Impact

2025-05-16
What Is the Penalty for Not Having Health Insurance in Michigan?

What Is the Penalty for Not Having Health Insurance in Michigan?

2025-05-16
How Long Can You Go Without Car Insurance Before Being Penalized in Connecticut?

How Long Can You Go Without Car Insurance Before Being Penalized in Connecticut?

2025-05-16
How Much Is an Er Visit in California with Insurance?

How Much Is an Er Visit in California with Insurance?

2025-05-16
Ford Price Confirms Breach of Important Resistance

Ford Price Confirms Breach of Important Resistance

2025-05-16

Cryptocurrency

Cryptocurrency27

NFT Marketplace X2Y2 to Shut Down After Three Years as Trading Volume Plummets

2025-04-04
Cryptocurrency

Elon Musk Denies U.S. Government Plans to Use Dogecoin, Cryptocurrency Drops 3%

2025-04-01
Cryptocurrency

Gold Bull Peter Schiff Bets on Bullish Gold Amid Bitcoin’s Struggles

2025-03-30
Cryptocurrency

Fidelity Plans to Launch Spot Solana ETF

2025-03-29
Cryptocurrency

BlackRock Launches Bitcoin ETP in Europe: A Key Step for Institutional Adoption

2025-03-28
Cryptocurrency

Closing Bell Movers: GameStop Gains 7% on Earnings, Bitcoin Announcement

2025-03-27
FinancialfocusHub.com

FinancialFocusHub.com is your gateway to insightful financial guidance and strategies. Explore expert advice on investing, saving, and managing wealth. Stay informed with the latest trends and tools to empower your financial journey.

Recent Posts

  • Capital Returns To Us-Listed Chinese Etfs After Sell-Off 2025-05-16
  • Trump: UAE, US Agree On Abu Dhabi Buying Advanced AI Chips 2025-05-16
  • Oil Prices Fall Amid Iran-U.S. Nuclear Deal Uncertainty 2025-05-16
  • Japan Economy Shrinks Amid Trump Trade War Impact 2025-05-16
  • What Is the Penalty for Not Having Health Insurance in Michigan? 2025-05-16

TAGS

Useful Links

ABOUT US

Disclaimer

Privacy Policy

Copyright © 2024 financialfocushub.com

No Result
View All Result
  • Home
  • Forex
  • Insurance
  • News
  • Stocks

Copyright © 2024 FinancialFocusHub.com is your gateway to insightful financial guidance and strategies. Explore expert advice on investing, saving, and managing wealth. Stay informed with the latest trends and tools to empower your financial journey.