European markets decline as traders react to German election results

European markets opened lower on Monday following the German federal election results. The Christian Democratic Union and Christian Social Union (CDU/CSU) secured 28.6% of the votes, while the far-right AfD received 20.8%, and the Social Democratic Party (SPD) got 16.4%. Deutsche Bank analysts suggest a likely two-party coalition between CDU/CSU and SPD, focusing on immigration and defense. They noted that recent foreign policy events may lead to increased defense spending in Germany. Germany's defense spending was 2.12% of GDP in 2024. Analysts expect it could rise to at least 2.5% in the next term, but financing this increase may require support from smaller parties, necessitating political compromises.