Stocks in Germany Decline Amid U.S. Budget, Debt TalksJonathan Morgan
German stocks declined for a second day as investors watched U.S. negotiations over re-opening the government and raising the country’s borrowing limit.
Commerzbank AG dropped 1.8 percent after Boersen-Zeitung cited a board member as saying that the lender’s 2013 corporate-banking earnings will be worse than in 2012. Deutsche Lufthansa AG fell 1.7 percent, following its European peers lower. Infineon Technologies AG rose 0.6 percent.
The DAX Index fell 0.4 percent to 8,555.89 at the close of trading in Frankfurt. The equity gauge slipped for a second week last week as a standoff between U.S. lawmakers led to the first government shutdown in 17 years. The broader HDAX Index also retreated 0.4 percent today.
“Democrats and Republicans haven’t shown any sign of a potential agreement on the government shutdown or the debt ceiling,” Christoph Hock, an equity sales trader at Alpha Wertpapierhandels GmbH in Frankfurt, wrote in an e-mail. “Investors are caught between missing the big medium-term move on the upside and getting burned in the very short-term on the downside. That’s reflected in the recent spike of volatility.”
The VStoxx Index, which gauges the cost of protecting against swings on the Euro Stoxx 50 Index, advanced 3.6 percent to 20.89 as of 5:57 p.m. in Frankfurt. The volume of shares changing hands in DAX-listed companies was 19 percent lower than the average of the last 30 days, according to data compiled by Bloomberg.
President Barack Obama reiterated that he won’t negotiate with Republicans over policy conditions tied to passing the federal budget and raising the $16.7 trillion debt ceiling. Senate Majority Leader Harry Reid yesterday called for a vote on a clean funding plan to open the government without preconditions.
The Treasury has said that it will exhaust measures to avoid exceeding the borrowing limit on Oct. 17. If that happens, the government would run out of cash to pay all of its bills at some point between Oct. 22 and Oct. 31, according to the Congressional Budget Office.
Amid delayed U.S. economic reports, investors await financial results as an earnings release from Alcoa Inc. after the close of European trading today marks the unofficial start of the U.S. quarterly reporting season. JPMorgan Chase & Co. and Wells Fargo & Co. will also post results this week.
Profits for the Standard & Poor’s 500 index probably rose 1.7 percent during the third quarter while sales rose 2.2 percent, according to analysts’ estimates compiled by Bloomberg. Analysts expect earnings growth to accelerate to 8.9 percent in the final three months of the year, the data show.
Commerzbank, Germany’s second-largest lender, declined 1.8 percent to 8.75 euros. Boersen-Zeitung quoted Markus Beumer as saying that corporate banking earnings this year “won’t be as good as in 2012.”
Lufthansa, Europe’s second-biggest airline, fell 1.7 percent to 14.01 euros, as a measure of travel and leisure companies slid the most of the 19 industry groups on the Stoxx Europe 600 Index.
Infineon, Europe’s second-largest semiconductor maker, climbed 0.6 percent to 7.34 euros, after earlier rising as much as 1.7 percent.
Celesio AG jumped 20 percent to 20.49 euros, its biggest gains since at least 1996. McKesson Corp., the largest U.S. drug distributor, is in advanced talks to buy the German drug wholesaler for almost 22 euros a share, Dow Jones reported, citing unnamed people.
EON AG rose 0.5 percent to 13.87 euros, paring earlier gains of as much as 1.5 percent. Germany’s biggest utility announced a partnership with DEGA Group to build and operate power plants for Russian business parks.