Elections to the Bundestag are taking place on September 26th. Opinion polls show that the ruling conservative party CDU of the outgoing chancellor Merkel is rapidly losing support, and the social-democratic party with the potential future prime minister Olaf Sholz is currently rallying ahead.
As for now, the polls show that Germans' preferences for socialists are 24%, and the conservatives are favoured by 21% of the electorate. Just 2 weeks ago, the situation was almost completely the opposite. And the gap is growing every week.
So, why is this important and what will happen in the event of the Social-Democratic Party winning the election?
-Zero Euro interest rates will stay with us for long. At least, for the 4 years to come
-Ultra-soft monetary policies will remain in place, and are likely to become even "softer". The large-scale purchase of ECB bonds will continue.
Thus, this will create conditions for depreciation of the European currency in the long-term and growth of quotes on the European stock market, primarily in Germany.
Undoubtedly, the German elections results are just one of the many factors defining the prospects of European financial assets, but they are one of the most important conditions that will define the vector of further dynamics of the European financial system.