The German election on the weekend saw voters flock to both extremes as the centralist party stumbled to victory: Both the far-right Alternative fuer Deutschland and the far-left Die Linke saw significant gains and were the most popular parties among young people. Although this means the conservative alliance won the election, it was still their second-worst result ever. The political landscape fragmented as the government failed to address people’s mounting concerns, with migration a significant polarising issue for voters.
Challenges remain for Germany’s new leadership, with a flagging economy and the need to increase domestic spending — much of which is contingent on German lawmakers being able to reform a restrictive debt-limiting rule known as the “debt brake” — sounds like the US. The election results were no surprise; with polling/bookmakers getting this one correct, the market took the result in its stride, gaining +0.6% on hopes of increased spending sooner rather than later.
- We continue to look for European bourses to outperform their US peers in 2025, but they’ve already rallied hard hence, a pullback wouldn’t surprise.
