AfD scores historic victory in Saxony-Anhalt; markets weigh global risks

The state is small, but the impact is huge. Voters in Saxony-Anhalt in Germany have delivered a political shock with surging support for right-wing party AfD, in a blow to Chancellor Friedrich Merz.

Investors will assess other key risks this week, from Ukraine to air travel, while President Donald Trump's pressure on the Fed will keep markets on edge.

Read on for more.

What you need to know today

The Alternative for Germany (AfD) party has won an historic victory in Saxony-Anhalt state elections. The result puts the far-right party on the verge of an absolute majority at state level for the first time since World War II.

The AfD won 44.4% of the vote, with Chancellor Friedrich Merz's conservatives trailing at 18.3%, and the center-left Social Democrats and environmental Greens both clearing the minimum threshold to enter parliament, according to an exit poll on Sunday.

AfD's lead candidate in Saxony-Anhalt, Ulrich Siegmund, has campaigned on a promise of strict immigration policies, abandoning the euro and reconnecting with Russia.

Ukraine's stalemate

Trump's envoys, Jared Kushner and Steve Witkoff spent the weekend in Moscow and Kyiv, in a bid to break the deadlock in the war between Russia and Ukraine.

Despite three hours of talks with Russian President Vladimir Putin on Saturday, the Kremlin indicated that there had not been a breakthrough.

Meanwhile, Ukraine's President Volodymyr Zelenskyy told a press conference following the meetings in Kyiv that territorial issues should be discussed "at the levels of leaders."

Flight incidents

Investigators are looking into the circumstances behind the crash of an Amazon cargo plane at Miami airport on Sunday that has killed five people and left others critically injured.

The 32-year-old Boeing aircraft overran the runway at around 2 p.m. ET, crashing into vehicles on a road used for airport services.

The incident prompted over 160 flight cancellations and more than 325 delays into Sunday.

Meanwhile in Southeast Asia, hundreds of flights have been disrupted after a volcanic eruption in Indonesia.

The ash from the eruption of Mount Anak Krakatau caused havoc for aviation, impacting flight schedules across the region over the weekend.

Monday markets

It's Labour Day in America, so U.S. markets are closed for trade, after falling on Friday following a surprisingly strong August jobs report. The data sparked further speculation that the Federal Reserve could consider hiking rates at its next meeting, however, Trump renewed his threats against this, saying he could halt trade with America's top partners unless the Fed cuts rates.

In Asia, stocks are in the green during Monday's session, led higher by technology stocks.

Europe's lift-off

Isar Aerospace has become the first commercial group to launch a rocket into orbit from Europe. The Spectrum rocket carried satellites into orbit.

Join "Squawk Box Europe" as we speak to Isar Aerospace about the milestone for the company.

And Finally...

Sugar is outperforming the stock market this year.

Sugar is getting a lot less sweet for buyers.

Sugar prices surged 21.5% in August, marking its strongest monthly gain since October 2010, when it rose 24%. The United Nation's Food and Agriculture Organization Food Price Index also rose in August amid broad-based increases, led by sugar.

"The surge reflected expectations of lower sugar beet yields in the European Union due to adverse weather, concerns over the impact of El Niño on production prospects in key producing countries in Asia, lower sugar production in Brazil, and India's announcement of duty-free raw sugar imports," the organization said in its recent report.