Mette Frederiksen’s Social Democrats, despite their weakest election performance since 1903 in the March 2026 vote, remain the largest single party in the Folketing and continue to anchor trader expectations for the next government. Her initial coalition negotiations collapsed after record-length talks, prompting King Frederik X on May 9 to assign Venstre leader Troels Lund Poulsen responsibility for forming a center-right administration excluding the Social Democrats and Moderates. This shift has lifted Poulsen’s profile while elevating Moderates chair Lars Løkke Rasmussen as a potential kingmaker whose seats could still determine the outcome. With a two-week negotiation window now underway and no bloc holding a clear majority, traders appear to weigh Frederiksen’s incumbency advantage and party size most heavily against the procedural barriers facing alternative formations.