German Stocks Rise; Lufthansa, Allianz Offset DaimlerJonathan Morgan
German stocks rose, recovering from yesterday’s slide, as a gain in Deutsche Lufthansa AG offset a decline in Daimler AG, and investors waited for U.S. President Barack Obama’s State of the Union address.
Deutsche Lufthansa added 2 percent after DZ Bank AG upgraded its recommendation on the shares. Daimler retreated 1.3 percent as a gauge of carmakers fell the most among the 19 industry groups in the Stoxx Europe 600 Index.
The DAX rose 0.4 percent to 7,660.19 at the close of trading in Frankfurt. A tightening election contest in Italy and political scandal in Spain have disrupted market calm, paring gains made by the index this year after U.S. lawmakers agreed on a compromise budget to 0.6 percent from as much as 2.2 percent through January. The broader HDAX Index rose 0.4 percent today.
“There will be plenty to be nervous about but investors are not expecting Obama to make any real changes,” said Henrik Drusebjerg, who helps oversee $220 billion as a senior strategist at Nordea Bank AB in Copenhagen.
The volume of shares changing hands on the DAX was 13 percent less than the average over the past 30 days, according to data compiled by Bloomberg.
Obama will propose spending on infrastructure, clean energy and education in his address, according to an administration official briefed on the speech. Fostering economic growth remains the best strategy to narrow a federal budget gap that has exceeded $1 trillion in each of the last four years, he will say, according to the official.
EU finance ministers gathered in Brussels today to discuss the bloc’s budget for next year amid political uncertainty in Italy and Spain. “Market participants are looking at the finance ministers’ meeting,” Drusebjerg said. “It could ignite some sparks regarding the euro crisis.”
Lufthansa, Europe’s second-biggest airline, added 30 cents to 15.08 euros as DZ Bank raised its recommendation on the stock to buy from hold, forecasting a 12-month price target of 17.50 euros.
Allianz SE, Europe’s largest insurer, advanced 1.1 percent to 103.70 euros after Berenberg Bank AG re-initiated a buy recommendation on the shares, forecasting a price of 124 euros.
Daimler, the world’s third-biggest luxury-car maker, fell 61 cents to 44.38 euros. Continental AG, Europe’s second-largest supplier of auto parts, lost 1.1 percent to 86.89 euros.
“Carmakers are having a tough time because investors are getting worried about Japan and how far the yen will depreciate,” Drusebjerg said. “The talk about currency wars has troubled the agenda this week.”
The Japanese currency gained against all 16 of its most-traded peers today after a Group of Seven official said the G-7 is concerned about the yen and Japan will be discussed at the Group of 20 meeting in Moscow this weekend. The yen has weakened 8.6 percent versus the euro this year, according to Bloomberg data.
ThyssenKrupp AG retreated 0.3 percent to 17.70 euros, paring earlier losses of as much as 2.2 percent. Germany’s biggest steelmaker reported adjusted earnings for the first fiscal quarter that fell 38 percent.
Adjusted earnings before interest and taxes dropped to 229 million euros ($307 million), from 372 million a year earlier, the Essen, Germany-based company said. The average of 13 analyst estimates compiled by Bloomberg was for 211.8 million euros.