European markets hail Merkel’s looming exit as German chancellor
Markets across Europe surged on news that Angela Merkel will stop being German chancellor in 2021. The Monday rally was led by a surge in Merkel’s homeland, Germany.
In Frankfurt, the DAX index surged nearly two percent on the announcement. Markets in France and the UK followed with the London FTSE surging 1.72 percent and CAC40 rising 0.75 percent. Merkel made the announcement after her party showed poor results in a regional election. The news also sent the euro lower briefly against the dollar and bolstered German bond yields.
October has been a very bad month for the DAX, as the German market has plunged 6.8 percent, hitting its lowest level since December 2016 on Friday.
The US indices rebounded on Monday after a week of heavy losses that sent American equities into correction territory last week. The Dow Jones Industrial Average rose 316 points, or 1.28 percent, the S&P 500 index climbed 1.62 percent, while the Nasdaq Composite Index advanced 1.48 percent, during early trading.
American equities are still on track for their worst month in over eight years as global markets face investor panic amid escalating trade tensions between the US and China and signs of cooling economic growth globally.
Despite Monday’s gains, investors are not too optimistic about the near future. “With the volatility of the last week or so, today’s stronger open to markets should not be seen as a sea change but more a pause for breath,” Edward Park, investment director at Brooks Macdonald, said, as quoted by Reuters
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