German Stocks Decline as DAX Pares Monthly GainAlexis Xydias
German stocks fell, paring a monthly gain for the benchmark DAX Index, as investors weighed the effect of an increasing trend in bond yields and as a report showed retail sales in the country missed forecasts.
Linde AG slipped after JPMorgan Chase & Co. cut its rating on the industrial-gases company. Praktiker AG dropped as Commerzbank AG cited the home-improvement retailer as saying sales have declined in rebranded stores.
The DAX slid 0.6 percent to 8,348.84 at the close in Frankfurt. The gauge still climbed 5.5 percent in May, beating all other 23 national indexes among the developed markets tracked by Bloomberg, as central banks around the world maintained their stimulus efforts. The broader HDAX Index lost 0.5 percent today.
“While the mid-term outlook seems positive for equities, you will experience a spike in volatility in the short term,” Jacques-Pascal Porta, who helps oversee $780 million at Ofi Gestion Privee in Paris, said in a phone interview today. “It will become more difficult to forecast what the Fed is going to do as each month passes. But also stocks have had a phenomenal performance and higher prices infer more volatility.”
The German VDAX Index, which measures the cost of buying protection against swings on the DAX, on May 23 rose the most in seven weeks after Federal Reserve Chairman Ben S. Bernanke said the central bank may reduce purchases if the economy improves. The risk gauge in January fell to a record low of 12.29.
The yield in the benchmark 10-year German bund rose to 1.53 percent on May 29 from 1.17 on May 2, and rates for similar U.S. Treasuries climbed as high as 2.23 percent from 1.63 percent this month on concern the Fed may taper its bond-buying program.
The bund yield was little changed at 1.51 percent today and Treasury returns rose 3.7 basis points to 2.15 percent.
German retail sales unexpectedly fell in April for a third successive month, a release showed today. Sales, adjusted for inflation and seasonal swings, dropped 0.4 percent from March, when they declined a revised 0.1 percent, the Federal Statistics Office in Wiesbaden said. Economists in a Bloomberg News survey had forecast an increase of 0.2 percent.
In the U.S., business activity rebounded in May after declining for the first time in more than three years last month, a report showed. Consumer confidence rose this month to the highest level in almost six years as a rising stock market and property values helped lift Americans’ outlook on the economy, the Thomson Reuters/University of Michigan index showed today.
Linde dropped 0.7 percent to 148.05 euros, declining for a third day. JPMorgan cut its recommendation to neutral from overweight, or buy, saying its growth may lag behind that of rival Air Liquide SA. The stock was downgraded to neutral by Citigroup Inc. yesterday.
Praktiker tumbled 3.2 percent to 96 euro cents, for the lowest price since the retailer held its initial public offering in 2005. Chief executive officer Armin Burger said during the company’s annual shareholder meeting that rebranded stores are generating about 10 percent less in sales per square meter than before, Commerzbank wrote in a report to investors.
Salzgitter AG retreated 5.2 percent to 29.36 euros, for the worst performance since August. The stock was cut to reduce from neutral at Nomura Holdings Inc., which said the market’s expectation for earnings at the steelmaker this year “appears 10 percent too high.” The shares also left MSCI Europe indices at the end of trading today after being removed by MSCI Inc. on May 15.
Deutsche Boerse AG, operator of the Frankfurt exchange, gained 2.2 percent to 49.79 euros, posting the biggest two-day advance in three months. UBS AG was among brokerages that said today the exchanges operator will benefit from a European Union plan to dilute a proposed tax on financial transactions. They cited a Reuters report yesterday.