German Stocks Gain After U.S. Durable-Goods Orders ReportJonathan Morgan
German stocks advanced, rebounding from a two-month low, as reports from the U.S. showed that orders for durable goods and sales of new houses climbed more than economists had forecast.
Hochtief AG, the German builder controlled by Spain’s Actividades de Construccion & Servicios SA, gained 3.5 percent.
The DAX Index rose 1.6 percent to 7,811.3 at the close of trading in Frankfurt, rebounding from its lowest level since April 23. The equity benchmark retreated 4.2 percent last week, erasing its gain for the quarter, as investors prepared for a potential paring of stimulus this year by the Federal Reserve. The broader HDAX Index also increased 1.6 percent today.
“This is probably a short-term rebound after the DAX suffered heavy losses since last Thursday,” said Ion-Marc Valahu, co-founder and fund manager at Clairinvest in Geneva.
In the U.S., a Commerce Department report showed that bookings for goods meant to last at least three years climbed 3.6 percent for a second month. The median forecast of 81 economists surveyed by Bloomberg had called for durable goods to increase 3 percent. Excluding transportation equipment, where demand is volatile month to month, orders advanced 0.7 percent. That also exceeded projections.
A separate release showed that sales of new properties rose in May more than forecast, increasing to the highest level in almost five years. Purchases increased 2.1 percent to an annualized pace of 476,000, according to the Commerce Department. That exceeded every estimate in a Bloomberg survey.
The Conference Board’s index of consumer confidence rose to 81.4 this month, its highest level since January 2008, from a revised 74.3 in May, data from the New York-based research group showed today. The median forecast of 77 economists surveyed by Bloomberg had called for a reading of 75.1.
Minneapolis Fed President Narayana Kocherlakota and Richard Fisher, president of the Fed Bank of Dallas, emphasized that the central bank’s monetary policy remains accommodative. The two presidents, who differ over the need for more stimulus, will vote next year on the Federal Open Market Committee, when the members may decide when to end the program of asset purchases known as quantitative easing.
“Today’s advance is slightly to do with two members of the Fed saying, don’t worry stimulus will be there for a while,” Henrik Drusebjerg, who helps oversee $220 billion as a senior strategist at Nordea Bank AB in Copenhagen, said by phone.
In Asia, an official from the People’s Bank of China said that it can control liquidity risks in the financial markets and seasonal forces affecting interest rates will fade.
The central bank will closely monitor the money-market rate going forward and keep it at reasonable levels, Ling Tao, deputy director of the Shanghai branch of the PBOC, said at a briefing in the city today.
“It is significant that China’s central bank has started communicating with the markets, so we don’t have to guess that much,” Drusebjerg said. “The main comment was that it was just a temporary short-term adjustment of liquidity and they are in control of the situation.”
Hochtief gained 3.5 percent to 47.92 euros.
Volkswagen AG, Europe’s biggest carmaker, added 3.1 percent to 151.50 euros. Bayerische Motoren Werke AG, the largest maker of luxury cars, increased 2.9 percent to 65.92 euros. Continental AG, Europe’s second-largest auto-parts supplier, rose 2.6 percent to 97.02 euros.
A gauge of carmakers rose the most among the 19 industry groups in the Stoxx Europe 600 Index.
Bayer AG advanced 1.2 percent to 79.03 euros. The drugmaker said it has agreed to pay Seattle Genetics Inc. to use the American company’s anti-cancer technology to develop a new class of treatments.
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