German Stocks Fall as SAP Drops on Earnings ConcernsSarah Jones
German stocks fell for the first time in four days, extending the biggest monthly drop in more than a year, as companies from SAP AG to SGL Carbon SE retreated amid investor concerns about earnings.
SAP declined 3 percent after Accenture Plc, a bellwether for the technology industry, forecast revenue that fell short of analyst estimates. SGL Carbon plunged the most since 2008 after the company cut its profit forecast. ThyssenKrupp AG and Commerzbank AG climbed at least 1.5 percent.
The benchmark DAX Index retreated 0.4 percent to 7,959.22 at the close in Frankfurt, trimming its quarterly gain to 2.1 percent. The gauge has lost 4.7 percent in June, the biggest decline in 13 months, after the Federal Reserve indicated it may start paring its stimulus program this year. The broader HDAX Index also slipped 0.4 percent today.
“European earnings momentum remained negative in June for a 27th consecutive month,” Matthew Gilman, a strategist at UBS AG in London, wrote in a note to clients dated today. “Earnings downgrades are now being driven entirely by disappointing revenue,” he said.
German stocks rose earlier as Japanese industrial production data beat economist forecasts and Fed Bank of Atlanta President Dennis Lockhart said that investors may have overreacted to Chairman Ben S. Bernanke’s announcement that the central bank could taper its bond-buying program.
Speaking in Marietta, Georgia, after European markets closed yesterday, Lockhart said that the Fed’s very low interest-rate policy will remain in place for a considerable time and policy will remain “highly accommodative.”
The market should “pause for a second,” Alex Friedman, chief investment officer at UBS, told Francince Lacqua on Bloomberg Television from Zurich. “What the Fed has done is really not unexpected. The biggest risk right now is that investors basically misinterpret what the Fed is doing and I think that creates buying opportunities.’
The German VDAX Index, which measures the cost of buying protection against swings on the DAX, has still increased 14 percent in June, it’s first back-to-back monthly advance in 13 months.
SAP, the largest maker of business-management software, dropped 3 percent to 56.26 euros. European technology companies slid after Accenture forecast fourth-quarter revenue of $6.7 billion to $7 billion. That missed the $7.36 billion average analyst estimate.
The world’s second-largest technology-consulting company is considered a bellwether for the information-technology market because its earnings cycle ends one month sooner than competitors. SAP will report earnings on July 18.
SGL Carbon dropped 11 percent to 24.44 euros, the biggest selloff since October 2008. The carbon-fiber maker cut its full-year earnings forecast because of competition from Asia, and said it would take a charge to reduce the value of its assets.
Earnings before interest, taxes, depreciation and amortization may decline as much as 60 percent this year. It previously predicted a fall of as much as 25 percent.
ThyssenKrupp advanced 3.2 percent to 15.10 euros as Sueddeutsche Zeitung reported that RAG Foundation could become a shareholder in the steelmaker. RAG could participate in a capital increase that together with Alfried Krupp von Bohlen und Halbach Foundation will help to protect ThyssenKrupp from a hostile takeover, according to the newspaper, which cited people familiar with the matter.
Separately, Credit Suisse Group AG analyst Michael Shillaker said it’s “time to start building positions” in the steelmaker. The bank expects ThyssenKrupp to dispose of its Americas unit in about a month and together with a capital increase this should see the stock “rally materially,” according to a report sent to clients today.
Commerzbank rose 1.5 percent to 6.70 euros, rebounding from a six-day selloff that sent the shares tumbling 13 percent to a record low. The bank’s Commerz Real unit wants to sell its special funds business to competitor Internos, Handelsblatt reported, citing unidentified people close to the company.