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18 Sep 2013
Approaching the German elections DAX challenges record highs, Merkel threatened by coalition weakness
FXstreet.com (London) - As Germany heads towards its general elections on Sunday, Angel Merkel has continued to set out her stall as the leader best place to manage the German economy and to lead Germany at the centre of Eurozone restructuring.
The Merkel campaign was buoyed by big numbers released yesterday by the ZEW Institute. The ZEW Indicator of Economic Sentiment for Germany increased by 7.6 points in September 2013, to 49.6 points, against a historical average of 23.8.
In a Christian Democratic Union party rally, Merkel reiterated her position of conditional bailouts to troubled periphery Eurozone countries versus the opposition position of pooled Eurozone debt.
Merkel market favourite
Markets rallied when her party emerged successful from Bavarian elections last week, indicating the direction of travel should Merkel emerge victorious from Sunday’s elections.
Opposition SPD leader, Peer Steinbrueck is seen as an anti-market candidate, proposing to raise the German top rate of income tax from 42 percent to 49 percent, as well as adding further “wealth taxes”. He has also proposed bans on speculative trades on commodities and foodstuffs, seemingly unaware that those markets have globalised in the last century, making trading restrictions difficult to enforce.
The biggest threat to a Merkel comes from electoral weakness from current coalition allies, the liberal Free Democrats (FDP). Current polls have the FDP hovering dangerously close to the 5 percent threshold, below which they would not be eligible to enter parliament. A failure of the FDP to solidify support before the elections would likely lead to Merkel forming a “Grand Coalition” with the SPD. But with it previous incarnation dogged by partisanship in 2005-2009, Merkel will be hoping for a miracle resurrection from her liberal allies.
The DAX currently stands at 8619.14, challenging record highs at 8,626.11.
The Merkel campaign was buoyed by big numbers released yesterday by the ZEW Institute. The ZEW Indicator of Economic Sentiment for Germany increased by 7.6 points in September 2013, to 49.6 points, against a historical average of 23.8.
In a Christian Democratic Union party rally, Merkel reiterated her position of conditional bailouts to troubled periphery Eurozone countries versus the opposition position of pooled Eurozone debt.
Merkel market favourite
Markets rallied when her party emerged successful from Bavarian elections last week, indicating the direction of travel should Merkel emerge victorious from Sunday’s elections.
Opposition SPD leader, Peer Steinbrueck is seen as an anti-market candidate, proposing to raise the German top rate of income tax from 42 percent to 49 percent, as well as adding further “wealth taxes”. He has also proposed bans on speculative trades on commodities and foodstuffs, seemingly unaware that those markets have globalised in the last century, making trading restrictions difficult to enforce.
The biggest threat to a Merkel comes from electoral weakness from current coalition allies, the liberal Free Democrats (FDP). Current polls have the FDP hovering dangerously close to the 5 percent threshold, below which they would not be eligible to enter parliament. A failure of the FDP to solidify support before the elections would likely lead to Merkel forming a “Grand Coalition” with the SPD. But with it previous incarnation dogged by partisanship in 2005-2009, Merkel will be hoping for a miracle resurrection from her liberal allies.
The DAX currently stands at 8619.14, challenging record highs at 8,626.11.