German Stocks Drop as Draghi Damps Stimulus SpeculationAdria Cimino
German stocks retreated to a five-week low as European Central Bank President Mario Draghi unveiled no additional stimulus measures after the ECB’s monthly policy meeting.
Allianz SE and Commerzbank AG slipped more than 2 percent, posting the biggest losses on the benchmark DAX Index. Henkel AG climbed after Exane BNP Paribas raised its recommendation on the maker of Persil detergent.
The DAX fell 1.2 percent to 8,098.81 at the close of trading in Frankfurt, the lowest level since May 2. The gauge erased an earlier gain of as much as 0.5 percent as Draghi spoke at a press conference in Frankfurt. The HDAX Index declined 1.1 percent today.
“The fancy for further rate cuts has gone,” said Christian Schmidt, a market analyst at Helaba Frankfurt. “Those hopes haven’t been fulfilled.”
The volume of shares changing hands in companies on the DAX was 13 percent lower than the 30-day average, according to data compiled by Bloomberg.
The ECB kept its benchmark interest rate unchanged at 0.5 percent today, matching the forecasts of 57 of 59 economists surveyed by Bloomberg News. Morgan Stanley and IHS Global Insight had predicted a quarter-point reduction.
Stocks declined across Europe as Draghi said that the combined economy of the euro area will return to growth by the end of the year, allowing policy makers to avoid providing additional stimulus.
“We had an ample discussion of the various measures, non-standard measures that could be utilized to repair the transmission policy,” Draghi told reporters after the central bank’s meeting. “We see no reason to act on all these fronts. These are measures we keep on the shelf.”
The Bank of England left its bond-purchase target at 375 billion pounds ($579 billion) and its key interest rate at 0.5 percent, as predicted by economists surveyed by Bloomberg.
A report from Germany’s Economy Ministry today showed that factory orders in Europe’s largest economy decreased 2.3 percent in April, a bigger decline than the 1 percent drop forecast in a Bloomberg survey. They climbed a revised 2.3 percent in March.
Allianz, Europe’s largest insurer, lost 2.5 percent to 113.20 euros. Munich Re, the world’s biggest reinsurer, slipped 1.8 percent to 137.60 euros. Commerzbank, Germany’s second-largest bank, slid 2.4 percent to 7.52 euros.
Gauges of banks and insurance companies led the Stoxx Europe 600 Index lower.
Henkel advanced 0.5 percent to 74.04 euros. Exane raised its recommendation to neutral from underperform, meaning that investors should hold the shares. The company would find it straightforward to make small acquisitions, Exane said.