There’s a new front-runner in the race to lead Germany after Angela Merkel — Olaf Scholz, of the center-left SPD party.
According to the betting market site Smarkets, Scholz’s chances have jumped from 3% to 55% in just four weeks, as Armin Laschet of Merkel’s CDU party has tumbled to 39% from 85%. Germany heads to the polls on Sept. 26.
Even if Scholz becomes chancellor, the mix of party composition is wide open and is likely to involve post-election negotiations. The favorites, so to speak, are a coalition of SPD, Greens and the FDP — at just 25% probability.
The German DAX
stock market index has modestly underperformed the broader European market this year, with a 15% gain compared to a 19% rise for the Stoxx Europe 600.
The more telling action seems to be in the bond market. The yield on the 10-year bund
rose as high as -0.07% this year, before falling to -0.5% as Merkel’s center-right coalition had improved in the polls, but now is rising back, at -0.39% on Thursday.
“More fiscal easing in Germany under a SPD-led coalition government remains an upside risk scenario,” said economists at Goldman Sachs.
Thursday saw muted action in European markets, with the Stoxx Europe 600
The biggest Stoxx 600 gainer was biopharmaceutical Swedish Orphan Biovitrum
which rose 26% after recommending a buyout offer from U.S. private equity firm Advent International Corp. and Singapore’s Aurora Investment, worth 69.4 billion kronor, or around $8.1 billion.
Video games maker CD Projekt
climbed 11% in Warsaw after a smaller-than-forecast profit decline. Its bug-ridden Cyberpunk 2077 game returned to the Sony PlayStation Store on June 21, and the company is planning new versions of Cyberpunk and The Witcher 3 late this year.