German Stocks Advance Amid Partial US Government ShutdownJonathan Morgan
German stocks advanced, after falling the most in a month yesterday, as investors weighed the partial shutdown of the U.S. government, and manufacturing in the world’s largest economy expanded faster than forecast.
Siemens AG climbed 3.2 percent as Chief Executive Officer Joe Kaeser said the company must close the profit gap with its competitors. Bayerische Motoren Werke AG, the largest maker of luxury cars, rose 1.8 percent as a gauge of automakers gained on the Stoxx Europe 600 Index and it announced price increases.
The DAX Index jumped 1.1 percent to 8,689.14 at the close of trading in Frankfurt. The measure rose 6.1 percent in September as the Federal Reserve unexpectedly refrained from paring bond purchases. It added 8 percent in the three months through September, for its biggest quarterly advance in a year, and is heading for a 14 percent annual gain. The broader HDAX Index also rose 1.1 percent today.
“The reality is that when you look at previous shutdowns, markets have been negative but not hugely negative,” Raimund Saxinger, a fund manager at Frankfurt-Trust Investment GmbH, which oversees about $22 billion, said in a telephone interview. “We are seeing a rebound following yesterday’s weakness. It seems that people are relieved that markets did not move any lower, and that there wasn’t any increased selling pressure.”
The volume of shares changing hands in DAX-listed companies was 13 percent lower than the average of the past 30 days, according to data compiled by Bloomberg.
U.S. lawmakers in Washington passed a midnight deadline without reaching a compromise to continue funding the government, resulting in the first partial shutdown in 17 years. The shutdown will put as many as 800,000 federal employees on temporary unpaid leave from today. The Democrat-controlled Senate earlier voted 54-46 against a Republican-controlled House of Representatives funding bill linked to changes in President Barack Obama’s health-care legislation.
Congressional leaders have scheduled no further negotiations on spending legislation, raising concerns among some lawmakers that the shutdown could bleed into the more consequential fight over how to raise the U.S. debt limit to avoid a first-ever default after Oct. 17.
The U.S. won’t have enough money to pay all of its bills at some point between Oct. 22 and Oct. 31 without action by Congress, according to the Congressional Budget Office.
The Institute for Supply Management’s index unexpectedly rose to 56.2 in September, the strongest since April 2011, from 55.7 in August, the Tempe, Arizona-based group’s report showed today. Readings above 50 indicate growth. The median forecast in a Bloomberg survey of economists was 55.
Siemens, Europe’s biggest engineering company, climbed 3.2 percent to 91.90 euros. Kaeser said in a letter to employees difficult global economic conditions were not an excuse for Europe’s biggest engineering company to lag behind its competitors. Siemens said yesterday it will cut 15,000 jobs, more than initially planned, to achieve cost-cutting targets.
BMW advanced 1.8 percent to 80.91 euros as it announced price increases for the U.S. market.
Henkel AG, the maker of Dial soap and Loctite glue that is diversifying its operations outside Europe, declined 1.6 percent to 74.92 euros. Unilever, the world’s second-largest consumer-goods maker, said third-quarter sales growth weakened amid a slowdown in emerging markets.
Loewe AG, the maker of high-end televisions that applied for creditor protection more than two months ago, tumbled 27 percent to 4.43 euros, a record low, after a court approved a plan for a self-administered insolvency process.
Loewe “will remain fully operational” as it reorganizes, the company said today in a statement. “The restructuring process initiated by the executive board will also continue as before, focusing entirely on concluding the meetings with investors.”