German Stocks Pare Decline as Deutsche Telekom Advances
Continental AG (CON) retreated 1.1 percent as a gauge of auto-related shares dropped. Deutsche Telekom AG advanced 1.8 percent after UBS AG upgraded Germany’s largest phone company.
The DAX (DAX) slipped 0.1 percent to 8,586.98 at 10:35 a.m. in Frankfurt, paring an earlier decline of as much as 0.3 percent. The equity benchmark has fallen 0.9 percent this week. It rose 6.1 percent in September as the Federal Reserve unexpectedly refrained from paring bond purchases. The broader HDAX Index fell 0.2 percent today.
“If the U.S. Congress does not raise the debt limit and the U.S. defaults on its obligations, that would be catastrophic for financial markets and the economy, potentially resulting in more damage than the financial crisis in 2008,” Daniel Kukalj, an equity analyst at Close Brothers Seydler Research AG in Frankfurt, wrote in a note. “This game of cat and mouse may end not only with a disaster for the U.S. economy; it would also have a big impact on the global economy.”
In the U.S., the partial government shutdown entered its fourth day today, with as many as 800,000 federal employees temporarily out of work, as lawmakers wrangled over the budget for the new financial year, which started on Oct. 1. The Labor Department has postponed the publication of its monthly jobs report, which was due today.
Congress also faces a dispute over raising the $16.7 trillion debt ceiling this month. The Treasury has said that it will exhaust measures to avoid exceeding the borrowing limit on Oct. 17. If that happens, the government would run out of cash to pay all of its bills at some point between Oct. 22 and Oct. 31, according to the Congressional Budget Office.
The Treasury Department said yesterday that a federal default could lead to a recession comparable to the 2008 financial crisis. Separately, International Monetary Fund Managing Director Christine Lagarde said in a speech in Washington that “it is mission critical that this be resolved as soon as possible.”
The volume of shares changing hands in DAX-listed companies was 16 percent lower than the average of the last 30 days, according to data compiled by Bloomberg.
To contact the reporter on this story: Jonathan Morgan in Frankfurt at email@example.com
To contact the editor responsible for this story: Andrew Rummer at firstname.lastname@example.org