The recent victory of Friedrich Merz in the Bundestag election has led to notable movements in the currency and stock markets. The euro has appreciated against both the dollar and the Swiss franc, reflecting a shift in market sentiment.

In Asian trading, DAX index futures rose by as much as 1.5%, recovering from earlier losses. This increase occurred amid low trading volumes, indicating a cautious optimism among investors. Analysts are anticipating that Merz’s leadership will result in:

• Higher government spending
• A stable political climate
• Enhanced market sentiment

Furthermore, the preliminary election results indicate that the Sahra Wagenknecht alliance did not exceed the five percent threshold. This outcome allows Merz to potentially form a two-party coalition with the SPD, eliminating the need for the Greens to secure a majority. If a new government is established promptly, it could further strengthen the euro’s position.

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