DAX Rally Holds as Preliminary Results Show Populist Parties’ Win
Populist parties show a spike in support from the left and right in Thuringia and Saxony state elections.
Populist parties show a spike in support from the left and right in Thuringia and Saxony state elections.
The preliminary count for German state elections show the right-wing AfD (Alternative for Germany) won in Thuringia with 33.2% of the vote. While in Saxony the party came in second, behind the Christian Democrats, with 30.6% of the vote.
The parties that lost the most votes were the 3 of the federal government coalition, including the SPD, Social Democrats, projected to get 7.6%. While the coalition allies, Greens and Free Democrats may both lose representation as they are likely to not meet the 5% threshold.
On the opposite of the political spectrum from the AfD the populist BSW (Sahra Wagenknecht Alliance) gained more votes than any of the coalition parties, with a projection of 11,5 to 15.6%.
The disastrous results for the government parties have come after the failure of establishment to tackle illegal immigration, inflation, and the war in Ukraine. It also makes a coalition government at the next general election among establishment parties less likely.
If the AfD and BSW secure similar results in the coming general election in the fall of 2025, it will be extremely likely that there is no outright majority without one of these two parties’ involvement.
This type of coalition could make passing new legislation complex, the current coalition still hasn’t balanced the budget, with a gap of €12 billion. A show of how difficult alliances are, even when the differences are smaller.
Technical View
The day chart above for the DAX shows a market that has rallied above the Ichimoku cloud and is technically in a bullish trend. However, the last two sessions have met with resistance from the previous all-time high.
Today’s candle tested a new all-time high and has turned south from there. Immediate support comes from the previous high of 18,785 (blue line). If the market breaks that level, the next support comes from a previous ATH of 18,601 (black line).
To confirm the market’s bullish trend, we need to see a close above today’s high of 19,000. Looking at the RSI, we see it has turned away from the level of 70.
This signals a possible weakness in the underlying bullish trend. If today’s candle finishes in the red, I expect the market to test further lows in the coming days.
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