German Share Markets React to Surprise Chancellor Election

German shares rebounded following Friedrich Merz's election as chancellor, despite initial setbacks and market uncertainty. Germany's DAX index closed 0.5% lower, recovering from a 2% loss. Meanwhile, U.S. unpredictability impacted European markets, while wind turbine maker Vestas shares surged on profitable earnings.

German shares clawed back initial losses on Tuesday as conservative leader Friedrich Merz secured the chancellorship during a second parliamentary vote, despite experiencing an unforeseen initial defeat.

The DAX index in Germany closed 0.5% lower after an initial fall of up to 2% when Merz's alliance with the centre-left Social Democrats faced a surprising setback in the first vote. According to Teeuwe Mevissen, a senior market economist at Rabobank, "It's very un-German because we know Germany particularly for its political stability."

The pan-European STOXX 600 index ended 0.2% lower, pausing a 10-day winning streak, amid lingering uncertainty over tariffs, especially in light of U.S. President Donald Trump's erratic trade policy plans. Trump's recent tariff announcements affected market dynamics, contributing to declines in the healthcare sector, where heavyweight drugmaker Novo Nordisk saw a 4% drop in shares.

(With inputs from agencies.)