German center-left Social Democrats declared victory in the parliamentary election: EUR stays mostly flat; China’s power shortage widens

German center-left Social Democrats (SPD) claimed victory in the parliamentary election. SPD has taken the biggest share of the vote, gaining 2% ahead of the center-right Christian Democrats. However, the tight results suggest that negotiations to form the coalition government will likely be time-consuming. After the election results, EUR stayed mostly flat against major counterparts such as CHF and USD.

In China, power shortages have halted production at key factories supplying Apple, Tesla, and a number of other international firms. The current shortage is a combination of multiple factors, such as coal shortages and tightened restrictions on emission standards. The government has implemented rationing on electricity in many parts of northeastern China during peak hours. The power shortage has prompted some analysts to downgrade their 2021 growth outlook. Nomura cut its third and fourth-quarter China GDP growth forecasts to 4.7% and 3.0% respectively from 5.1% and 4.4%, and its full-year forecast to 7.7% from 8.2%.