German stocks fell to a three-week low as European Central Bank President Mario Draghi said poor demand and financial market conditions may affect the euro-area economy and as investors awaited tomorrow’s U.S. jobs data.
Metro AG slid the most in more than five months after Morgan Stanley lowered its recommendation for the retailer. Merck KGaA posted the biggest gain on the benchmark DAX Index, rising 4.9 percent, after agreeing to buy Luxembourg-based AZ Electronic Materials SA for $2.6 billion.
The DAX dropped 0.6 percent to 9,084.95 at the close in Frankfurt, the lowest level since Nov. 13. The gauge has dropped 3.4 percent this week as investors weighed U.S. data to gauge when the Federal Reserve will reduce monthly bond purchases. The benchmark has advanced 19 percent this year. The broader HDAX Index also fell 0.6 percent today.
“Markets are trying to find their orientation,” Matthias Jasper, head of equities at WGZ Bank AG in Dusseldorf, Germany, said by phone. “The focus is still on Fed tapering concerns, and Draghi hasn’t said anything to surprise markets in a positive way. Ahead of the next Fed meeting, markets will remain a bit nervous.”
Draghi predicted the euro area will experience a prolonged period of low inflation, addressing reporters in Frankfurt after the ECB left its key interest rate unchanged.
“The risks surrounding the economic outlook for the euro area are assessed to be on the downside,” he said. “Developments in global money and financial market conditions and related uncertainties may have the potential to negatively affect economic conditions”
In the U.S., Labor Department will tomorrow publish last month’s reading on U.S. non-farm payrolls, and data may show the unemployment rate fell to 7.2 percent.
The Fed has said it will consider reducing its $85 billion of monthly bond purchases if the economy improves in line with its forecasts. Policy makers, who next meet on Dec. 17-18, will probably wait until March to reduce monthly bond purchases to $70 billion, according to the median estimate in Bloomberg’s survey on Nov. 8.
U.S. gross domestic product climbed at a 3.6 percent annualized rate, Commerce Department figures today showed. That’s up from an initial estimate of 2.8 percent and the strongest since the first quarter of 2012. The median forecast of economists surveyed by Bloomberg was for a 3.1 percent gain.
Metro dropped 4.8 percent to 34.29 euros, the biggest drop since June. Morgan Stanley cut its rating on the retailer to equal weight, similar to neutral, from overweight, citing a lack of immediate reasons for the stock price to go up. The stock has rallied 65 percent this year.
Drillisch AG fell 3.6 percent to 20 euros after saying it will issue 100 million euros of bonds that can be exchanged for shares. The bonds are convertible into about 4.1 million shares, or 7.7 percent of all outstanding shares.
Merck climbed 4.9 percent to 130.50 euros, the highest price since it sold shares to the public in 1995. The acquisition will allow Merck to expand its chemicals business to include AZ’s products such as specialty chemicals used in the production of microchips and anti-reflective coatings used in hard-disk drives.
K+S AG, a German potash producer, gained 0.8 percent to 20.96 euros. The stock has still tumbled 40 percent so far this year, heading for its biggest annual loss since at least 1999, according to data compiled by Bloomberg.