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German Stocks Rise as Investors Await Fed Policy Decision

Updated on

Dec. 18 (Bloomberg) -- German stocks advanced as a report showed business confidence rose in December, and as investors awaited the Federal Reserve’s decision on whether to reduce its monthly asset purchases.

Fresenius SE added 1.5 percent, for a fifth day of gains. TUI AG climbed to the highest price in more than five years after Europe’s largest tour operator reported a surprise full-year profit and said earnings will continue to rise as a turnaround plan gains speed. Deutsche Post AG climbed 2.2 percent after Helvea SA rated Europe’s largest postal company new buy.

The DAX Index gained 1.1 percent to 9,181.75 at the close of trading in Frankfurt, trimming its decline this month to 2.4 percent. The equity benchmark has surged 21 percent this year as central banks around the world pledged to leave interest rates low for a prolonged period of time. The broader HDAX Index increased 1 percent today.

“With the market’s recent weakness, it’s priced in a lot of the taper,” Jawaid Afsar, a trader at Securequity Ltd. in Sheffield, England, said in an interview. “One would look to buy the market for the year-end rally. I don’t expect a taper this evening. March is likely at the earliest.”

The Fed today concludes a two-day meeting to decide whether to begin trimming its $85 billion monthly asset-purchase program. About 34 percent of economists surveyed by Bloomberg on Dec. 6 predicted that the U.S. central bank will announce a reduction in stimulus after European markets close.

Confidence Rises

German business confidence rose for a second month in December, to its strongest in 20 months. The Ifo institute’s business-climate index, based on a survey of 7,000 executives, increased to 109.5 from 109.3 in November. That matched the median prediction of 39 estimates in a Bloomberg News survey.

“The Ifo and other confidence indicators have created a crackling anticipation of the economy’s growth prospects going into 2014,” Carsten Brzeski, senior economist at ING Groep NV in Brussels, wrote in a note today.

The DAX will hit 10,000 by the end of 2014, 10 percent higher than the benchmark measure’s close yesterday, according to Baader Bank AG. Global economic growth will continue to improve and monetary policy of the major central banks will remain very accommodative, the bank wrote in a report.

Fresenius rose 1.5 percent to 108.70 euros, its highest price since at least 1998. Fresenius has rallied 4 percent in the last five trading days after Equinet Bank AG said in a Dec. 12 note that the health-care group will close its hospital portfolio deal with Rhoen-Klinikum AG before the end of the year.

TUI Gains

TUI added 3.8 percent to 11.68 euros. The Hannover-based company posted net income of 4.3 million euros ($5.9 million) for the fiscal year ended Sept. 30, compared with a loss of 15.1 million euros a year earlier. Analysts surveyed by Bloomberg had predicted a loss.

Deutsche Post climbed 2.2 percent to 25.05 euros. Helvea’s Christian Burger rated the postal-service provider a buy. He forecast the price will rise to 27 euros in the next year.

Dialog Semiconductor Plc advanced 4.1 percent to 15.21 euros, extending its two-day gain to 8.9 percent, after the designer of analog and digital-integrated circuits boosted its 2013 revenue forecast to at least $866 million. It had predicted no more than $851 million.

To contact the reporter on this story: Inyoung Hwang in London at ihwang7@bloomberg.net

To contact the editor responsible for this story: Cecile Vannucci at cvannucci1@bloomberg.net

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