German Stocks Advance on Bernanke’s Testimony to CongressNamitha Jagadeesh
German stocks rose as Federal Reserve Chairman Ben S. Bernanke said the central bank remains flexible on the pace of its bond purchases and will continue to keep interest rates low even after quantitative easing ends.
ThyssenKrupp AG climbed 3.4 percent after Credit Suisse Group AG said the company may be worth more if it spins off its businesses. Commerzbank AG, Germany’s second-biggest lender, dropped 1.4 percent for the worst performance on the benchmark DAX Index.
The DAX advanced 0.7 percent to 8,254.72 at the close in Frankfurt. The measure fell 9.8 percent from May 22 through June 24 as Bernanke signaled the Fed may pare bond purchases this year if the U.S. economy strengthens in line with forecasts. The DAX has rebounded 7.3 percent since then as central banks pledged to continue supporting economic recovery. The broader HDAX Index rose 0.5 percent today.
“Even though Bernanke didn’t say anything new, the language he used was reassuring for markets,” said Jacques Porta, who helps oversee $780 million as a fund manager at Ofi Gestion Privee in Paris. “Investors feel he is signaling more flexibility than they had previously thought.”
The Fed’s monthly asset purchases are not on a “preset course” and could be reduced more quickly or expanded based on economic conditions, Bernanke said in prepared testimony before the House Financial Services Committee.
“With unemployment still high and declining only gradually, and with inflation running below the Committee’s longer-run objective, a highly accommodative monetary policy will remain appropriate for the foreseeable future,” he said.
Minutes from the Bank of England’s meeting on July 3-4 showed that Paul Fisher and David Miles, two members of the central bank’s Monetary Policy Committee, dropped their call for increasing quantitative easing. The committee voted unanimously to keep the target for the bond-purchasing program at 375 billion pounds ($566 billion) and said it would consider other stimulus options as well.
ThyssenKrupp rose 3.4 percent to 16.31 euros. Germany’s biggest steelmaker may be worth between 30 euros ($39.40) and 40 euros a share in a “breakup/reinvestment scenario,” Credit Suisse said in a note. The stock gained 2.7 percent yesterday amid speculation it is close to selling its plant in Brazil. Credit Suisse said ThyssenKrupp may increase its capital by about 750 million euros after selling its Americas business.
BASF SE, the world’s biggest chemical maker, gained 1.1 percent to 70.83 euros and Lanxess AG rose 1.2 percent to 47.12 euros.
Commerzbank slid 1.4 percent to 6.35 euros. The shares have declined 41 percent this year as it carried out its fifth capital increase in four years in May and posted its second straight quarterly loss in the three months ended March.
Deutsche Lufthansa AG, Europe’s second-largest airline, retreated 1.3 percent to 15.34 euros.
The volume of shares changing hands in companies listed on the DAX was 20 percent lower than the average of the past 30 days, according to data compiled by Bloomberg.