German Politics in Turmoil as Merz Faces Crucial Budget Decision

The German political scene faces upheaval as opposition leader Friedrich Merz responds to Chancellor Scholz's plea for budget support following the coalition's collapse. Stock markets react to looming U.S. tariffs. Interest rate decisions from major central banks add another layer of complexity to a hectic day.

Friedrich Merz, the leader of Germany’s opposition conservatives, aims to clarify the political landscape on Thursday as he addresses an urgent request from Chancellor Olaf Scholz. This comes in the wake of Finance Minister Christian Lindner's dismissal, which led to the collapse of the ruling coalition and impending elections.

Amidst this political turmoil, German and European markets face threats of a 10% blanket tariff from a potential Trump-led Republican victory in the U.S. Germany, the EU's largest economy, could suffer significant economic impacts, especially in car exports, causing financial markets to react negatively.

Moreover, major central banks, including the U.S. Federal Reserve and the Bank of England, are set to announce crucial rate decisions. Investors eagerly anticipate the Federal Reserve's stance on inflation risks following proposed U.S. tariffs. Meanwhile, German economic health data and various central bank speeches add further layers to the day's complexity.

(With inputs from agencies.)