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Week in review: Mutti makes it four in a row

Week in review: Mutti makes it four in a row

Signs that populism is on the wane have been warmly welcomed by investors in recent months. European stock markets and the euro currency have both risen since far-right politicians failed to make gains in the Dutch and French elections earlier this year.

However, the German elections at the weekend proved that parties on the extreme right have not gone away. The Alternative fur Deutschland party (AfD) became the first openly nationalist party to enter the Bundestag since the Second World War, gaining 13% of the vote.

Chancellor Angela Merkel secured a fourth term in office, but will now have to form a three-way coalition government, weakening her own party’s hold on power. Concerns this could affect the stability of German policymaking caused the euro to fall against both the dollar and sterling over the week.

Lucy O’Carroll, Chief Economist at Aberdeen Standard Investments, commented: “This is a fairly hollow victory for Angela Merkel, who will have to negotiate a more complex coalition agreement against the backdrop of the AfD breaking through into the mainstream. Anyone who might have thought that European political risk had disappeared will have had a rude awakening”.

The result didn’t overly concern equity investors though: the FTSE World Europe Ex UK index finished the week up by 0.46%. In the UK, the FTSE 100 index rose 0.17%, while in the US, the S&P 500 index finished 0.31% higher.

Bombs away?

Concerns were raised about the job security of the 4,000 employees at the Bombardier aircraft factory in Belfast after the US Department of Commerce opted to impose a 220% tariff on the Canadian company’s C-Series jet. The move was a response to concerns raised by rival aircraft manufacturer Boeing, which complained about subsidies received by Bombardier from the Canadian and UK governments.

The case has sparked fears of a trade war between the US and Canada and brings the issue of protectionism to the fore at a time when the US is attempting to renegotiate the North American Free Trade Agreement with Canada and Mexico.

Christmas is cancelled

Michael O’Leary has moved to underpin his status as Europe’s least-loved businessman (in what is surely a fiercely contested category). The abrasive Ryanair boss announced this week that 34 additional routes would not operate for five months. The move affects a further 18,000 flights on top of those already cancelled, and sparked calls among consumer groups to boycott the airline. A spokesman for consumer magazine Which? described the situation as a “complete and utter shambles”, adding that “Ryanair has effectively cancelled Christmas for some of its passengers.

Shares in the airline had staged a minor recovery before the announcement, but subsequently fell another 3%. The value of the company now stands nearly 15% lower than before the current crisis.

And finally…

The owner of Vitus, a donkey in Vogelsberg, Germany was in a mulish mood after a court ordered him to pony up €6,000 for damage his four-legged felon caused to a bright orange sports car. Markus Zahn parked his €300,000 McLaren Spider in a car park bordering a paddock, without realising the car was within chomping range of Vitus. The police apparently did little to dissuade Vitus’ owner that the law is an ass, with their suggestion that the donkey may have confused the car for a carrot.

Editorial image credit: 360b / Alamy Stock Photo





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