German Stocks Little Changed Amid Japan Vote, U.S. Budget

German stocks were little changed as the election of a Japanese party that supports more economic stimulus offset concern that U.S. lawmakers won’t agree on a budget before the holidays.

Infineon Technologies AG (IFX) gained 1.3 percent after Sueddeutsche Zeitung reported that the company will extend its share buyback program. Deutsche Wohnen AG (DWNI) dropped 2.4 percent after Deutsche Bank AG downgraded the stock.

The DAX Index (DAX) rose 0.1 percent to 7,604.94 at the close of trading in Frankfurt. The equity benchmark earlier slipped as much as 0.4 percent. The gauge has risen 29 percent this year, the biggest rally of 24 developed equity markets tracked by Bloomberg. The broader HDAX Index also added 0.1 percent today.

“Probably the bigger driver for today is going to be Japan because while all the polls were suggesting that the Liberal Democratic Party probably would win, the scale of their victory was bigger than expected,” Andy Lynch, a portfolio manager at Schroder Investment Management Ltd. in London, said in a Bloomberg Television interview. “The current Bank of Japan governor has been very conservative, not wanting to really print money, push the yen down. The politicians now are going to be able to appoint someone who is going to agree with them and go down that route.”

Japan’s Liberal Democratic Party reclaimed power in a landslide victory yesterday. Shinzo Abe’s LDP now has a mandate to implement fiscal and monetary stimulus plans.

In the U.S., Republicans and Democrats must agree on a budget compromise to prevent more than $600 billion of tax increases and spending cuts from automatically coming into force at the beginning of next year.

Infineon Rises

Infineon Technologies advanced 1.3 percent to 5.89 euros, its third day of gains. Europe’s second-largest semiconductor manufacturer intends to extend its share-buyback program, Sueddeutsche Zeitung reported, citing an interview with Chief Executive Officer Reinhard Ploss. The CEO also said the company may make small or medium-sized acquisitions.

Deutsche Lufthansa AG (LHA) gained 1.9 percent to 14.03 euros. Macquarie Bank Ltd. raised the shares of Europe’s biggest airline to outperform from neutral, meaning that investors should increase their holdings.

Daimler AG, the world’s third-largest maker of luxury vehicles, increased 1.6 percent to 41.34 euros.

Metro AG (MEO) added 1.2 percent to 21.54 euros. Chief Executive Officer Olaf Koch said the company’s major shareholders have not indicated that they will significantly reduce their holdings in Germany’s largest retailer. Koch spoke in an interview with Capital magazine.

Deutsche Wohnen

Deutsche Wohnen fell 2.4 percent to 14.36 euros, declining for a third day. Germany’s largest residential landlord by market value was downgraded to hold from buy at Deutsche Bank, which cited its recent performance and the increased potential for disappointment in the short term. The shares have rallied 44 percent from the beginning of this year.

ProSiebenSat.1 Media AG (PSM), the broadcaster controlled by KKR & Co. and Permira Advisers LLP, lost 5.1 percent to 22.45 euros. The shares were downgraded to neutral from overweight at HSBC Holdings Plc “after a significant run-up and limited upside.” ProSiebenSat.1 has jumped 60 percent this year.

To contact the reporter on this story: Tom Stoukas in Athens at astoukas@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net

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