Trade the German Election

Will the German election be the next shock for markets? Traders are bracing for major market movements as Angela Merkel fights to remain German Chancellor.

Trade on EURUSD Germany 30 Bund

What does the German election mean for markets?

In this video, LCG Research breaks down all that traders need to know for the upcoming German election and the likely repercussions for markets.

Markets to watch during the election

DAX
German shares underperformed other equity benchmarks in the lead up to the election campaign. If Merkel secures a comfortable victory then there could be room for some catch-up.
Euro
Rising political risk before the election could send the euro lower but predictions of the ECB tapering its bond-buying program looks to be a bigger force for euro strength.
Bund
If Merkel’s victory starts to become uncertain, bunds could benefit as a haven. Still, any demand for bunds could be short-lived if the ECB stops buying them each month with quantitative easing.

Who is expected to form a government?

The larger parties could have to combine with smaller parties to form a government.
The following coalitions (named according to the colours of the parties) appear to be the most likely.
CDU/CS
SPD
FDP
Green
Source: Financial Times as at August 29, 2017

Who are the parties and how are they polling ?

If the polls prove to be correct, Angela Merkel could sweep into power again to lead the Bundestag in her fourth term as Chancellor. The biggest changes to the German political landscape could come from the other parties.

CDU/CSU
Leader: Angela Merkel (current Chancellor)
Seats in Bundestag: 311
Polling: 39%
SPD
Leader: Martin Shultz
Seats in Bundestag: 193
Polling: 23%
Left (Linke)
Leader: Katja Kipping, Bernd Riexinger
Seats in Bundestag: 64
Polling: 9%
Green
Leader: Simone Peter & Cem Ozdemir
Seats in Bundestag: 63
Polling: 7%
FDP
Leader: Christian Lindner
Seats in Bundestag: 0
Polling: 9%
AfD
Leader: Alice Weidel, Alexander Gauland
Seats in Bundestag: 0
Polling: 9%
Source: Financial Times, Wikipedia
Poll data correct as of August 29, 2017

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