German stocks rise as Merkel forges 'grand coalition'

On Wednesday, German Chancellor Angela Merkel's Christian Democrats agreed to form a coalition government with the Social Democrats, buoying German stocks above their peers in Europe. 

Michael Sohn/AP
German Chancellor and chairwoman of the Christian Democratic Union, Angela Merkel, (c.), smiles, as the chairman of the Christian Social Union, Horst Seehofer, (r.), and the chairman of the Social Democratic Party, Sigmar Gabriel, shake hands after they signed a coalition agreement in Berlin, Germany, Wednesday.

German shares outperformed their peers in Europe on Wednesday after the country's major parties agreed to form a new government and a measure of consumer confidence hit a six-year high.

Trading volumes were relatively light, however, as traders in the US started packing up for the Thanksgiving holiday.

The news that German Chancellor Angela Merkel's Christian Democrats have agreed the outlines of a "grand coalition" with the Social Democrats after two months of negotiations helped set the tone early in markets, particularly in Europe.

The rise in the GfK confidence indicator for Germany to 7.4 points for December from 7.1 in November also helped buoy stocks. It raised hopes that consumers in Europe's largest economy may be spending more — a development that could boost the battered economies of the 17-country eurozone, such as Greece and Spain.

"With a new minimum wage expected to come in as part of the coalition agreement, this should only fuel further spending from consumers, prompting further rises in these confidence figures and hopefully, more of a rebalancing in the region," said Craig Erlam, market analyst at Alpari.

Germany's DAX was one of Europe's best performers, trading 0.7 percent higher at 9,350. Elsewhere in Europe, the CAC-40 in France rose 0.4 percent to 4,296 while the FTSE 100 index of leading British shares was 0.3 percent higher at 6,658.

In the US, the Dow Jones industrial average was up 0.2 percent at 16,102 while the broader S&P 500 index rose 0.3 percent to 1,807.

Sentiment has been positive of late, particularly in the US, with the Nasdaq composite index the latest stock index to push through a key hurdle. On Tuesday, it closed above 4,000 for the first time since the end of the dot-com boom in 2000. It was up a further 0.5 percent Wednesday at 4,036.

A mixed bag of US economic data — weekly jobless claims were solid but durable goods orders disappointed — had little market impact as traders were heading out for Thursday's Thanksgiving break. Though US markets reopen on Friday, trading levels will likely remain light through the week.

Earlier in Asia, Japan's Nikkei 225 closed down 0.4 percent at 15,449.63 but Hong Kong's Hang Seng climbed 0.5 percent to 23,806.35. China's Shanghai Composite rose 0.8 percent to 2,201.07 and South Korea's Kospi was up 0.3 percent at 2,028.81.

Thailand's stock index climbed 0.9 percent after the central bank unexpectedly cut its policy interest rate by a quarter percentage point as escalating protests to topple the government add to pressure on the economy.

Elsewhere, the euro continued to recoup some recent losses, trading 0.1 percent higher at $1.3581.

The dollar was 0.8 percent higher at 102.07 yen, just shy of its earlier six-month high of 102.17 yen, as traders priced in the likelihood of further monetary easing by the Bank of Japan, which is trying to lift the world's number 3 economy and get inflation up to the 2 percent target.

"The belief of additional BoJ easing in 2014 will be important in keeping the yen on a weaker footing," said Derek Halpenny, an analyst at Bank of Tokyo-Mitsubishi UFJ.

You've read  of  free articles. Subscribe to continue.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.