German CDU Polls Slide 3.5% as Wüst Speculation Hits Merz

Support for Germany's Christian Democratic Union (CDU) has fallen to 28.5% in national polls, a 3.5 percentage point decline from its 32% peak earlier this year. The drop coincides with rising speculation that party leader Friedrich Merz could be replaced by the more popular North Rhine-Westphalia Minister-President Hendrik Wüst ahead of the 2027 federal election. The Financial Times reported on 30 May 2026 that internal party discussions about a potential 'chancellor swap' are intensifying as Merz's personal approval ratings stagnate.

Context — why this matters now

German political stability is a cornerstone of the European financial system. The last major leadership challenge within a dominant German party occurred in 2018 when Angela Merkel stepped down as CDU leader, triggering a period of internal volatility that saw the party's polling average drop by 8 points over the subsequent 12 months. The current macro backdrop features subdued European growth, with the Euro Stoxx 50 index trading flat year-to-date and the European Central Bank maintaining a cautious stance on further rate cuts.

The immediate catalyst for the current speculation is a series of poor state election results for the CDU under Merz's leadership, contrasted with Wüst's consistent electoral success in Germany's most populous state. This performance gap has fueled internal party doubts about Merz's ability to defeat Chancellor Scholz's SPD-led coalition in a national election. Market attention has intensified as polling gaps between potential CDU candidates have widened significantly.

Data — what the numbers show

CDU national polling support stands at 28.5% as of 30 May 2026, down from 32% in January 2026. Merz's personal approval rating is 37%, significantly trailing Wüst's 54% favorability rating among German voters. The CDU/CSU parliamentary group comprises 197 members, with an estimated 40-60 members reportedly sympathetic to leadership change discussions.

The euro has weakened 0.8% against the dollar since polling trends accelerated two weeks ago, trading at 1.0720 EUR/USD. Germany's 10-year bund yield has remained relatively stable at 2.41%, though credit default swap spreads on German sovereign debt have widened by 2 basis points. The DAX index has underperformed the broader Euro Stoxx 50 by 1.2% over the same period.

Analysis — what it means for markets / sectors / tickers

Political uncertainty typically weighs on domestically-focused German equities and the euro. Utilities like RWE and E.ON could face headwinds as Wüst represents a potentially greener energy policy shift than Merz, creating regulatory uncertainty. Export-oriented DAX components like Siemens and BMW may prove more resilient due to their international revenue bases.

A key limitation to this analysis is that Germany's 2027 election remains over a year away, giving any leadership transition ample time to stabilize. The CDU maintains a strong structural position in German politics regardless of its leader. Bond market reactions have been muted thus far, suggesting investors view this as party-specific rather than systemic risk.

Trading flow data shows increased put option activity on the EURO STOXX 50 index and specific selling pressure on German small-cap stocks. Hedge funds have been building short positions on the euro, though these positions remain within historical ranges for political event risk.

Outlook — what to watch next

The key near-term catalyst is the CDU's leadership conference scheduled for 15 June 2026, where internal factions may test support for Merz. Three state elections in September 2026 will serve as critical tests for both Merz and Wüst, particularly in Saxony-Anhalt where the CDU holds a narrow governing majority.

Market participants should monitor the 1.0700 support level for EUR/USD, a breach of which could trigger further technical selling. The DAX index faces near-term resistance at 18,500, a level it has tested unsuccessfully three times in the past month. Bund yields above 2.45% would signal rising concern about German political risk premia.

Frequently Asked Questions

What does German political uncertainty mean for European ETFs?

Investors in European-focused ETFs like VGK or HEDJ may experience short-term volatility primarily tied to euro weakness rather than direct equity depreciation. These funds typically have significant exposure to German exporters that benefit from a weaker currency, potentially offsetting domestic political concerns. The net effect on total returns depends on the duration of the uncertainty period.

How does this CDU leadership speculation compare to the 2018 Merkel transition?

The 2018 leadership transition created a 4-month period of DAX underperformance versus global peers by approximately 5%. Current volatility measures remain well below those observed during the actual Merkel transition, suggesting markets view this as preliminary speculation rather than imminent leadership change. The key difference is that Merkel voluntarily stepped down while Merz would potentially be challenged.

Which sectors benefit most from German political stability?

German infrastructure, construction, and renewable energy sectors typically outperform during periods of political certainty as they rely on clear regulatory frameworks and government investment commitments. Companies like Vonovia, Siemens Energy, and Infineon tend to trade at premium valuations during stable governments due to predictable policy environments.

Bottom Line

CDU internal tensions introduce political risk premia into European assets ahead of Germany's 2027 election.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.