German Stocks Post Biggest Weekly Gain in 19 MonthsJonathan Morgan
German stocks advanced for a fifth day, pushing the benchmark DAX Index to its biggest weekly rally in 19 months, amid optimism that global central banks will continue to support economic recovery.
Volkswagen AG and Daimler AG led carmakers higher. Praktiker AG rebounded from yesterday’s slump after naming an insolvency administrator.
The DAX rose 0.7 percent to 8,212.77 in Frankfurt. The gauge advance 5.2 percent this week, its biggest since Dec. 2, 2011. The measure has climbed 6.8 percent from a low on June 24 as central banks signaled they won’t withdraw stimulus measures anytime soon. The broader HDAX Index added 0.6 percent today.
“The U.S. closed at record highs and that is driving German stocks,” Soeren Steinert, who helps manage about $24 billion as associate director for equities trading at Quoniam Asset Management GmbH in Frankfurt, wrote in an e-mail. “More and longer stimulus means a support for global economies and more cheap money. This money needs to be invested.”
The Standard & Poor’s 500 Index gained 1.4 percent in New York yesterday after Federal Reserve Chairman Ben S. Bernanke backed sustained monetary stimulus. The gauge erased losses since Bernanke first signaled the Fed may trim bond purchases, one of the central bank’s stimulus tools.
European Central Bank executive-board member Vitor Constancio said Europe needs accommodative monetary policy for a longer period as it trails the U.S. in economic recovery.
The ECB’s pledge to keep interest rates low has been “successful in stabilizing financial markets unduly affected by spillovers from the recent Fed announcement of future tapering of quantitative easing,” he said in a speech in Singapore.
The ECB and the Bank of England have signaled they will keep interest rates low for the foreseeable future. The Bank of Japan has also said it will continue its accommodative policies.
Volkswagen climbed 1.2 percent to 167.35 euros, rising a fifth day for its longest winning streak since April 25. Europe’s biggest automaker reported a 3.7 percent increase in June group sales to 827,800 vehicles. Daimler advanced 6.2 percent to 52.35 euros.
Praktiker AG advanced 8.5 percent to 14.1 euro cents after naming Christopher Seagon of Wellensiek Rechtsanwaelte law partnership in Heidelberg, Germany, as its insolvency administrator. The home-improvement retailer yesterday plunged to its lowest price since its initial public offering in 2005 as it filed for insolvency.
SAP, the largest maker of business-management software, gained 1.2 percent to 57.36 euros.