European Stocks Mixed as German Chancellor Merkel Relected for Fourth Term
European stocks were mixed on Monday morning after German Chancellor Angela Merkel was reelected for a fourth term in Sunday's election but saw her majority cut in parliament and an increase in support for the far-right Alternative for Germany (AfD) party.
Merkel's conservative Christian Democratic Union (CDU) and its Bavarian sister party the Christian Social Union ( CSU ) garnered 33% of the vote, down 8.5 points from the 2013 election and hitting its lowest level since 1949, Reuters reported. The AfD got 12.6%, making it the first time a far-right party has entered the German parliament in more than half a century, according to Reuters.
Sentiment in London was hit as Moody's Investors Service on Friday downgraded the UK's sovereign credit rating to Aa2 from Aa1, the third-highest investment grade rating. The credit assessor cited the UK's weakened fiscal outlook as a result of the current economic slowdown and the manner of its departure from the European Union by leaving the single market and the Customs Union, and the domestic political dynamics after Prime Minister Theresa May lost her parliamentary majority in a snap election in June.
The downgrade came just after a major speech by May in Florence, Italy, in which she set out plans for a two-year transition period after leaving the bloc in March 2019. Brexit negotiations are due to resume for the fourth round in Brussels on Monday.
The pan-European STOXX 600 index was 0.1% higher after a 0.1% gain on Friday. The financial services sector was down and healthcare and energy stocks advanced. Commerzbank and Deutsche Bank each fell 1.5% in Frankfurt, while Standard Life and Prudential were down 1.8% and 1.4%, respectively, in London. Credit Agricole slid 1.3% in Paris.
German airline operator Lufthansa jumped 2.8% in Frankfurt after Reuters reported that it prepared to pay 200 million euros ($239 million) to buy assets from the insolvent AirBerlin. AstraZeneca gained 0.6% in London. Airplane maker Airbus rose 1.6% and construction to media and telecoms conglomerate Bouygues added 1.2%.
The euro-region blue-chip STOXX 50 index was flat, the DAX in Frankfurt was 0.1% higher, the FTSE 100 in London fell 0.3% and the CAC 40 in Paris was little moved.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Copyright (C) 2016 MTNewswires.com. All rights reserved. Unauthorized reproduction is strictly prohibited.