(C) Reuters. FILE PHOTO: The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, September 24, 2021. REUTERS/Staff
By Sruthi Shankar
(Reuters) – German shares hit ten-day highs on Monday after the federal election outcome reduced the chances of a left-wing coalition forming a government, while broader European markets cheered a surge in crude prices that powered oil stocks.
Germany’s centre-left Social Democrats were set to start trying to form a government after they narrowly won their first national election since 2005, saying they would seek to form a coalition with the Greens and the liberal Free Democrats in what is dubbed as the “traffic light” coalition.
While it might take a while before the new government is formed, investors were relieved that hard-left Linke party fell below the 5% threshold needed to enter parliament.
“The left wing Die Linke party’s poor election showing appears to have ruled out a left wing alliance, and its likely negative impact on German stocks,” according to BlackRock (NYSE:BLK) Investment Institute.
“We see the election outcome eventually resulting in a moderate left or right leaning government.”
German real estate company Vonovia, aircraft engine maker MTU Aero Engines (OTC:MTUAY) and renewables company Siemens Energy were the top gainers on the DAX.
The oil & gas index climbed 1.8% to hit a three-month high as Brent futures headed for $80 per barrel amid supply concerns. [O/R]
While worries about hawkish central bank policies, fallout from China Evergrande’s financial troubles and inflation have weighed on sentiment, investors are hoping that vaccination will drive a steady global recovery.
The STOXX 600 index has climbed 16.5% so far this year, falling slightly short of 18.6% rise in Wall Street’s S&P 500.
IWG Plc jumped 6.3% to the top of STOXX 600 after Sky News reported that British office rental firm is exploring a multi-billion pound break-up that would involve splitting it into several companies.
Zooplus AG gained 4.2% after Swedish private equity firm EQT (NYSE:EQT) AB made an offer to buy the online pet supplies’ retailer for about 3.36 billion euros ($3.94 billion), trumping a 3.29-billion-euro bid from U.S. private equity Hellman & Friedman.
Spain’s Cellnex Telecom slid 3% after Citigroup (NYSE:C) downgraded the stock to “sell”, citing valuation concerns.
European shares rise on German election relief, oil surge
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