German Stocks Slump the Most in More Than a Week
German stocks declined the most in more than a week after Portugal’s government lost the leader of its junior coalition partner, reviving concern that the country will cease its attempts to cut spending.
Deutsche Bank AG (DBK) fell to its lowest price in 10 weeks after Standard & Poor’s downgraded the lender’s credit rating. Adidas AG (ADS) slid 2.2 percent as Deutsche Bank lowered its recommendation for the world’s second-largest sporting-goods maker.
The DAX (DAX) dropped 1 percent to 7,829.32 at the close in Frankfurt. The gauge has lost 8.2 percent since May 22, when the Federal Reserve signaled that it may start to pare stimulus if the U.S. economy strengthens in line with its forecasts. The broader HDAX Index also slid 1 percent today.
“After the fears about the Fed tapering stimulus and China growth, the focus is back on Europe,” said Markus Wallner, an equity strategist at Commerzbank AG in Frankfurt. “We clearly see that with the spread, particularly in Portugal. The theme is back to the euro crisis. Sentiment is very negative due to too many uncertainties.”
Portuguese bonds slumped, pushing 10-year yields above 8 percent for the first time this year, after Paulo Portas resigned as foreign minister. Portas, who also leads the smaller CDS party in the coalition government, quit after Secretary of State for Treasury Maria Luis Albuquerque replaced Vitor Gaspar at the Ministry of Finance. The CDS leader said the new finance minister would offer “mere continuity” of the country’s deficit-cutting plans.
In Egypt, President Mohamed Mursi defied protests calling for his resignation. He proposed to end the nation’s political crisis by calling for an interim coalition government. The country’s military had set a deadline of today on the leader to find a way out of the crisis.
The volume of shares changing hands in DAX-listed companies was 11 percent greater than the average of the last 30 days, according to data compiled by Bloomberg.
Deutsche Bank declined 1.4 percent to 31.46 euros as S&P cut its credit rating to A from A+. The rating company said that new regulations and the increased risk of litigation threatened the lender’s investment-banking business. S&P added that the outlook for the bank is stable.
A gauge of European lenders contributed the most to the Stoxx 600’s decline. Commerzbank AG (CBK) slid 5.4 percent to 5.83 euros, its lowest price since at least August 1992.
Adidas dropped 2.2 percent to 81.95 euros after Deutsche Bank cut the stock to neutral, the equivalent of hold, from buy. The brokerage said that most currencies have moved to the detriment of the company.
“We don’t think that Adidas’ strategic positioning has worsened,” Michael Kuhn, an analyst at Deutsche Bank, wrote in a report. “However, the company has huge international sales exposure, and almost every currency has developed to its disadvantage, massively hitting its profit-generation ability.”
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