Why hungry stock traders should be wary of Sunday’s vote

Sean Gallup | Getty Images

Cars drive past election campaign posters hanging from lampposts on August 22, 2013 in Berlin, Germany.

German and broader European equities have enjoyed a stellar start to the year but during a bumpy summer stocks retraced many of those gains. Recent weeks have seen their fortunes improve once again but past performance suggests that the upcoming German Federal election scheduled for this Sunday, September 24, could threaten some of the current momentum.

Using hedge fund analytics tool Kensho, CNBC crunched some numbers to show how stock indexes in Europe have historically performed following German Federal elections. The data set shows the average return following seven different federal elections in Germany, dating back to 1990.

The results are not encouraging with Germany’s flagship DAX 30 index – comprising the 30 largest domestic companies trading on the Frankfurt Stock Exchange – posting an average -0.94 percent decline over the two trading sessions following an election. Only on two occasions were returns positive while the most drastic post-vote tumble came in 2002 when the index slid by -3.37 percent.

The picture for the U.K. benchmark FTSE 100 index is much the same with an average -0.85 percent decline over the same period while the return on France’s benchmark CAC 40 index sits between the dismal performances of the latter two, coming in with an average -0.91 percent slide. Amsterdam Stock Exchange’s AEX index of the Netherlands’ 25 most traded stocks is also flailing in red ink when returns are viewed over the period, capable of delivering only an average -0.38 percent fall.