German stocks retreated, with the benchmark DAX Index snapping the longest winning streak since July 2009, as carmakers led declines.
Volkswagen AG and Daimler AG dropped as a study commissioned by the Environment Ministry said German Chancellor Angela Merkel’s government should change the way it taxes company cars. Metro AG, Germany’s biggest retailer, slid after posting a loss for the first quarter. Infineon Technologies AG surged after raising its yearly outlook. Wacker Chemie AG gained as Deutsche Bank AG and CA Cheuvreux both recommended the stock.
The DAX Index lost 0.4 percent to 7,500.70 at the 5:30 p.m. close in Frankfurt, ending eight days of gains. The gauge had the biggest monthly increase so far this year in April as companies from Deutsche Bank to Volkswagen reported better-than-estimated earnings and the Federal Reserve maintained its pledge to keep interest rates low for an “extended period.” The broader HDAX Index tumbled 0.4 percent today.
“We’re overdue for a consolidation or a correction in the very short term as the market has to digest a strong upward move,” said Raimund Saxinger, a fund manager at Frankfurt Trust Investment GmbH, which oversees about $22 billion. “We will still see rising earnings but falling momentum.”
Of the 10 companies in the DAX that have reported earnings since April 11, 7 have beaten analyst estimates for earnings per share, according to data compiled by Bloomberg. Of the 30 companies in the HDAX that have released results in the period, 65 percent beat estimates.
Volkswagen, Europe’s largest carmaker, sank 1.7 percent to 132.50 euros, while Daimler, the world’s second-biggest maker of luxury cars, dropped 1.6 percent to 51.65 euros. Carmakers were among the worst performers in the benchmark Stoxx Europe 600 Index today, falling 1.5 percent.
The German government should replace the current system that taxes the private use of company cars based on their list price with a system based on the purchase price and kilometers traveled, according to a study by the Fifo economic institute posted on its website. The revised rules should also discourage companies from buying cars that use a lot of gasoline, it said.
Metro slid 2.2 percent to 48.37 euros as the retailer reported a first-quarter net loss of 3 million euros on sales that were little changed. Metro said revenue stagnated and earnings fell at its Media Saturn electronics unit in the first quarter as Spanish and Greek consumers refrained from major purchases.
Hannover Re Falls
Hannover Re slipped 1 percent to 40.65 euros as the world’s third-biggest reinsurer cut its full-year earnings forecast after quarterly profit fell 65 percent on claims from the earthquake in Japan.
CentroTherm AG sank 4.1 percent to 38.35 euros as HSBC Holdings Plc downgraded the solar company to “underweight” from “neutral,” saying it expects “solar cell prices to remain under pressure.”
Infineon surged 2.3 percent to 7.92 euros, the highest level in two months, after Europe’s second-largest chipmaker raised its full-year forecast for the fifth time since the beginning of 2010 as second-quarter revenue and profit surged on higher demand.
Wacker Chemie jumped 3.6 percent to 172.80 euros, the highest price in more than three years, after Deutsche Bank upgraded shares of the chemical maker to “buy” from “hold,” and Cheuvreux added the stock to its “selected list.”
Hochtief AG rose 2.4 percent to 64.84 euros as Citigroup Inc. rated the builder “buy” in new coverage with a price forecast of 72 euros.