Markets relieved by the result of German elections but key industries remain in uncertain – NBC4 Washington

• After the German elections, “we know who will have the coalition here, so I think the market considers it as a huge positive,” said Michael Field, Morningstar’s own capital strategist at CNBC, “Squawk Box Europe” .
• Some sectors could achieve whether the new government can fulfill its promise to restart economic growth, reduce energy prices and increase infrastructure expenses.
• However, obstacles are in the way of the brake reform of the debts observed closely, which can limit the ability to increase tax expenses.

Germany The result of the elections offered a lot of optimism in unpleasant markets at the beginning of the week, although the question whether the new government can provide higher promised public spending and Reboot the economy Continues to hang from the big major industries of the country.

Frankfurt’s Dax Index won 0.6% months, exceeding a UK flat Ftse 100 and losses of 0.78% for France CAC 40While the euro has dropped more than the US dollar and British pound and German loan costs have been slightly modified.

The Sunday vote won a victory for the conservative alliance of the Democratic Christian Union (CDU) and the Christian Social Union (CSU). Who set up Candidate cdu-csu Friedrich Merz -A pro-Business politician, who serves on the paintings in Germany Ey and Deutsche Börse-to-the-safety to take over as the next chancellor.

However, there remains a certain uncertainty, with a period of discussion about coalition and a future in which the support of the smaller parties will be needed to adopt promised policies, including Germany’s reform. The controversial rule of “debt brake”.

“I think what the market sees now is some stability, at least we know who has won the choices, we know who claims it and then we know who will have the coalition here. So, I think the market is taking this as a huge positive, “Michael Field, the head of equity at Morningstar, said CNBC on Monday.

A worse result of the market could have seen that CDU did not decrease to the level needed to start forming a coalition, triggering a “messy months of parties that are surrounded and not clarified for business,” said Field.

The result is positive for the German economy, because a “big coalition” in two parts between conservatives and social democrats (SPD) now looks like a probably result, a situation that would accelerate decision making, said Danske Bank analysts in a note.

Whether it is a coalition in two or three parts that brings a smaller player, such as Green-Merz has excluded governing with the far-right AFD party-the main parties are aligned with policies, including reducing energy and investments. More in infrastructure, Morningstar’s Field has told CNBC, who will see “positives that will come for companies in line”.

According to Field, this could provide an impulse to the sectors, including the German automatic industry, the sector once high which was beaten by the competition of electric vehicles in China, weak internal demand, threats and regulation of American tariffs.

“The sector is so stupidly beaten … Our position is that it does not take much to turn that impulse and to change easily in the positive direction and a new government in force with a mandate to truly reduce energy prices, trying To improve competitiveness in the economy, any offer could really give that rape sector that it needs bad at this stage, ”said Field.

The utilities sector largely with sight is another area that can benefit if the Government eliminates policies such as energy price covers and consumers’ energy taxes that have limited market yields, continued Field.

Siemens Energy President Joe Kaeser said CNBC on Monday that the government needs a long -term agenda to restructure Germany in the next five years. Such an agenda should focus on economy, infrastructure, energy, education, innovation, restructuring the pension and “regaining government control and government reforms”.

Arnd Franz, CEO of the Mahle car parts manufacturer, said CNBC that the production sector needed urgent actions on taxes, energy costs and labor market flexibility.

Citalist analysts have emphasized in a Monday note that “the post-elect political landscape will depend on the form of the coalition government, which will still be formed.”

Highlighting the impact on the market that the smaller parts could have, they said that the involvement of the green in a coalition would be positive for the construction companies that make heating and cooling equipment, as this would reduce the probability of eliminating subsidies and mandates. for the refurbishment of the heat pump.

Citalist analysts also said that they saw “the limited (medium -term) risk for the German wind auction onshore”, citing the CDU platform is time to “develop grids, storage facilities and all renewables”.

“It seems that this does not involve major steps aimed at preventing the development of wind energy,” according to Cito, supporting stocks such as Nordex and Vestasthey wrote.

However, key questions left for markets include if the government will be able to Returns the economy to growthReconstruct the weak feelings of business and consumers and increase the fiscal expenses by eliminating the rules established in the Constitution by limiting how much debt the government can assume. The last point has moved to the wider in recent weeks as European nations Talk about increasing their defense expenses In response to the Russian-Ukraine war and Tensions with the US

“The main growth from the market perspective … is the fact that the three parts of establishment (CDU/CSU, SPD and Green) do not claim the two thirds of the places needed to change the Constitution”, Rabobank’s economic research said the team on Monday.

Therefore, the transient reform does not have a clear way, AFD that opposes the removal of the debt brake, and the left Linke has been opened, but in contradiction with the SPD and which opposes the Ukraine army.

“The conclusion is, therefore, that yesterday’s electoral result has not led to the change of a clear path to allow a change in step in government expenses,” Rabobank said.

They added that the perspective of German and regional growth is thus “a gloomy determined in the absence of a dramatic fiscal change.”