By Michael Msika, Bloomberg Markets Live reporter and strategist
The market has built high expectations for Germany’s fiscal spending. Anything other than success in a crunch vote in the country’s parliament tomorrow would be a major downside risk for stocks, while bond vigilantes are hovering.
Since German leaders agreed to hold elections in November, the DAX has been on a tear, surging 20% excluding dividends. Most European stock markets have also rallied, with the broader Stoxx 600 up about 9%. Meanwhile, the German mid-cap MDAX has risen 10% but is still trailing larger peers, a sign that investors may be waiting for the all-clear before significantly increasing domestic exposure.
