The regional elections of 6 September 2026 in the state of Saxony-Anhalt resulted in a historic victory for the far-right party Alternative for Germany (AfD), which won approximately 43.8% to 44% of the vote, its best-ever result in a state election, falling just three seats short of an absolute majority. Chancellor Friedrich Merz's CDU suffered a significant defeat, falling to 17.2%, roughly half of its 2021 result.
Despite the national and European political relevance of the result, the impact on markets was contained. The German DAX index opened and traded slightly lower (approximately -0.3%), while other European indices such as the CAC 40 and FTSE 100 posted modest gains. The euro remained stable, gaining 0.15% against the dollar, and the yield on German 10-year Bunds stood at elevated levels (close to 3.35%-3.36%), although the rise is mainly attributed to inflationary pressures and energy prices.
The relative calm in markets is explained by the fact that Saxony-Anhalt represents only about 1.8% to 2% of German GDP and has few listed companies of significance. Furthermore, investors consider that the odds of the AfD effectively taking over the state government, let alone at the federal level, remain low due to the so-called "Brandmauer" (firewall/containment wall) maintained by traditional parties, who refuse to form coalitions with the party.
However, broker XTB warns of long-term risks, highlighting that the AfD's main proposals, such as restoring relations with Russia, leaving the eurozone and highly restrictive immigration policies, could trigger a significant shock to the German economy. The real risk may lie in Berlin, where this result weakens Merz's government and fuels the perception of political fragmentation, potentially raising Germany's political risk premium and affecting the country's attractiveness for foreign investment.
