Market Extra: Why Germany’s political clash over immigration matters for markets

Investors were focused on political developments in Germany on Monday, where Chancellor Angela Merkel and interior minister Horst Seehofer were locked in a last-ditch effort to resolve their disagreements of migrant policy and save Germany’s current governing coalition.

Immigration policies have been at the heart of the struggles of this coalition, which was formed after months of strenuous negotiations, comprising Merkel’s Christian Democrats, Seehofer’s Christian Social Union and the Social Democrats. The CDU and CSU are traditional coalition partners, though the CSU is known to be more conservative.

Seehofer has been one of Merkel’s most outspoken critics throughout the formation of the fragile coalition, declaring Merkel too soft in dealing with migrants that Germany has welcomed over the past few years.

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