The federal election on Sunday produced a clear result: there will be a new Chancellor named Friedrich Merz. But what does a Chancellor Friedrich Merz mean for the DAX (DE40.cash) ?
The Union emerged from the election as the clearly strongest faction with 28.5%, followed by the AfD with 20.8% and the SPD, which achieved a historically poor result. The Left Party performed surprisingly well, but the FDP is out of the Bundestag and the BSW did not make it, even if just barely.
Based on the firewall to the AfD that Friedrich Merz has built, everything is currently pointing towards a coalition between the CDU and the SPD, a solid and short-term, probably positive result for both the euro and the DAX. After the correction that began in recent days, the DAX is therefore on the verge of a small rally; in early Monday trading, the German leading index is trading significantly more than 1% higher than its closing price on Friday, with the euro against the US dollar just above 1.0500.
However, in both the medium and long term, it is not possible to predict whether the DAX will react positively or negatively to this election result.
However, against the backdrop of Friedrich Merz's undeniable relationship with Blackrock and the increasingly loud calls for the debt brake within the SPD-led traffic light coalition, speculation on "more" liquidity alone could soon help the DAX reach new heights and all-time highs.
DAX chart analysis – Daily:
Source: XStation5 by XTB
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