German stocks rose while bonds edged up after Social Democrats captured the biggest share of the vote in a close contest, beating the center-right bloc led by outgoing Chancellor Angela Merkel. The result is likely to result in the SPD party led by Olaf Scholz heading a government, though the alliance led by Armin Laschet also could lead the government. A so-called traffic light coalition, with the SPD, the Greens and the pro-business Free Democrats, is seen as the most probable outcome.
“The conservative CDU/CSU and the social-democrat SPD have come out almost neck and neck in Germany’s federal election, meaning either one has the potential to lead a likely moderate coalition government. The left-wing Die Linke party’s poor election showing appears to have ruled out a left-wing alliance, and its likely negative impact on German stocks,” said analysts from the BlackRock Investment Institute. The yield on the 10-year bund
fell slightly, to -0.23%, while the German DAX joined other regional benchmarks with advances. The DAX
rose 1.1%, while the U.K. FTSE 100
rose 0.9% and the French CAC 40
added 0.6%. The euro
fell to $1.1706 from $1.1721.