Merkel returned as German chancellor despite election losses
German chancellor Angela Merkel has been re-elected for a fourth term as the country’s leader, with her CDU/CSU joint effort remaining the largest in the parliament after Sunday’s election.
The bloc saw its worst share of the vote in the last 70 years however, increasing the pressure on Merkel with a slimmer majority in the German legislature.
The second-largest party in the vote was the SPD, Merkel’s former coalition partner, but Martin Schulz’s outfit was hit by a major loss of seats and will now fall back into the opposition ranks.
One of the main talking points surrounding the election was the performance of the nationalist AfD party, which will take seats for the first time as it was catapulted into third place on Sunday.
The AfD has only been in existence for the last four years, but picked up 13% of the vote, compared with 35% for the CDU/CSU alliance.
MARKET REACTION
European equity markets opened lower across the board on Monday as investors digested the election results.
“Merkel’s diminished authority – and the rise of a party with links, and similar Eurosceptic views (among other things), to UKIP and France’s National Front – appears to be weighing on both the euro and the region’s indices,” said Spreadex analyst Connor Campbell.
Ipek Ozkardeskaya from London Capital Group commented that while markets were down at the beginning of the week after the result, it should not have a lasting impact on securities.
"Though the presence of the AfD should not significantly impact German intentions regarding the EU in the immediate future, the rising populism dampened the mood in the euro markets. Martin Schulz’s SDP had the worst performance since the war."