Most German Stocks Decline as U.S. Debt Impasse ContinuesNamitha Jagadeesh
Most German stocks declined, following a two-day rally for the DAX Index, as U.S. politicians remained divided over an agreement to raise the debt limit before Thursday’s deadline to avoid a default.
Infineon Technologies AG slipped 1.5 percent after Bank of America Corp. lowered its recommendation on the chipmaker. Software AG followed European technology stocks lower after software maker Dassault Systemes SA posted worse-than-forecast revenue. EON SE and RWE AG, Germany’s biggest utilities, climbed more than 1 percent after a report that they have asked political parties to reduce a tax on nuclear fuel.
The DAX fell less than 0.1 percent to 8,723.81 at the close in Frankfurt, as two stocks retreated for every one that advanced. The equity benchmark jumped 2.4 percent in the past two trading days to a record amid optimism over U.S. debt talks. The broader HDAX Index was little changed today.
“German equities are a bit negative on the back of concerns about U.S. debt-ceiling talks,” said Lorne Baring, who oversees about $500 million as managing director of B Capital SA in Geneva. “Markets are nervous about the intransigence in the U.S. On Friday, there was a relief rally because it looked like there was some flexibility on the part of politicians. Today, there is disappointment.”
The volume of shares changing hands in DAX-listed companies was 33 percent lower than the 30-day average, data compiled by Bloomberg show.
In the U.S., Democrats and Republicans held talks over the weekend on how to resolve a fiscal impasse three days before the government exhausts its borrowing authority. If that happens, the U.S. 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. The stalemate also prolongs a federal government shutdown that began on Oct. 1.
Democrat and Senate Majority Leader Harry Reid held inconclusive talks with Minority Leader Mitch McConnell yesterday. Senators plan to reconvene at 2 p.m. in Washington today, and the Republican-controlled House of Representatives at noon, with no votes before 6.30 p.m. local time.
“The discussions were substantive and we’ll continue those discussions,” Reid said on the Senate floor, before leaders concluded almost four hours of debate without a deal.
In China, a report on Oct. 12 showed that exports unexpectedly contracted in September, falling 0.3 percent from a year earlier. The median forecast of economists in a Bloomberg survey had called for a gain of 5.5 percent.
Infineon lost 1.5 percent to 7.37 euros after Bank of America’s Merrill Lynch unit downgraded the chipmaker to neutral from buy. The brokerage said that the company may increase its capital-expenditure commitments as surveys show manufacturing industries expanding globally.
Software AG fell 1.1 percent to 25.62 euros. A gauge of technology shares posted the worst performance of the 19 industry groups in the Stoxx Europe 600 Index as Dassault reported third-quarter sales of 496 million euros ($674 million). It had forecast revenue of 520 million euros.
EON gained 1.2 percent to 13.90 euros and RWE added 1.3 percent to 27.13 euros. The two companies have asked the Christian Democratic Union and the Social Democrats to lower tax on nuclear fuel, Der Spiegel reported, without saying where it got the information. Chancellor Angela Merkel, who leads the CDU, has ordered all the country’s nuclear power stations to close by 2022.