Euro Gains on German Election; U.S. Stock Futures Advance
The euro gained and German mid-cap stocks rose on speculation that the German election results could pave the way for more spending to boost economic growth. S&P 500 futures pointed to gains after a selloff on Friday.
The euro rose 0.2% after paring some earlier gains, and Germany’s MDAX, a gauge of mid-cap companies, rose 1.8%. Investors are optimistic that German conservative leader Friedrich Merz will be able to form a coalition government and ease an era of tight fiscal policy in Germany.
Broader gains in European stocks were limited, with the Stoxx 600 little changed. Prosus NV slumped 7.5%, one of the biggest drags on the index, after announcing plans to buy Just Eat Takeaway.com NV for 4.1 billion euros ($4.3 billion).
German conservative leader Merz emerged victorious in Sunday’s election, but the results gave his Christian Democrat-led bloc only one clear path to power and they face intense pressure to move quickly to form a government.
While the far-right Alternative for Germany, or AfD, doubled its support to become the second-largest party with 20.8%, it failed to become a minority on its own.
“This is a tricky election result. There is a clear mandate and that should allow for a quick deal on quite a lot of policies that should help. But the far right and the far left can stop constitutional reform,” Jari Stehn, chief European economist at Goldman Sachs Group Inc., said in a Bloomberg Television interview.
In Asia, a sharp rally in Chinese technology stocks stalled on Monday after President Donald Trump’s executive order curbed Chinese spending in some strategic U.S. sectors. In corporate news, Berkshire Hathaway Inc. intends to increase its stakes in Japan’s five largest trading houses “over time,” Warren Buffett said in his annual letter to shareholders.
Source: Bloomberg
