German Stocks Decline as EU Reduces Growth ForecastInyoung Hwang
German stocks declined from a record as the European Union trimmed its forecast for euro-area growth next year and investors weighed company results.
Bayerische Motoren Werke AG dropped 2.9 percent after the world’s biggest maker of luxury vehicles reported a decrease in third-quarter profit. Siemens AG lost 1.3 percent after UBS AG cut its rating on Europe’s largest engineering company. Beiersdorf AG rallied 5.3 percent after increasing its full-year sales forecast.
The DAX slipped 0.3 percent to 9,009.11 at the close of trading in Frankfurt, paring earlier losses of as much as 0.8 percent. The gauge advanced to a record yesterday as investors awaited this week’s monetary-policy decision from the European Central Bank. The broader HDAX Index dropped 0.3 percent today.
“Today feels like the small leg down that everyone had been expecting for weeks,” Alex Neil, head of equity and derivatives trading at EFG Bank in Geneva, said in an interview. “Instead of the innocuous correction it could have been, it’s being overshadowed by the prospect of a slowdown in European growth. Many investors will be waiting on the sidelines to see what the ECB does on the back of the revised EU forecasts.”
Gross domestic product in the 17-nation currency bloc will rise by 1.1 percent in 2014, less than the 1.2 percent forecast in May, the Brussels-based commission said today. Unemployment, now at its highest rate since the euro was introduced, will be 12.2 percent in 2014, higher than the 12.1 percent predicted six months ago.
The DAX has still surged 18 percent this year as the Federal Reserve maintained stimulus measures and the ECB cut interest rates to a record low. The ECB will make its next announcement on monetary policy on Thursday.
Bank of America Corp., UBS and Royal Bank of Scotland Group Plc forecast the central bank will cut its benchmark rate at the meeting, according to a Bloomberg News survey of 70 economists, with the rest predicting no change. The ECB last reduced the interest rate in May to a record low of 0.5 percent.
“I don’t think any central bank is going to start reeling in the easy money anytime soon, so I still think we’ll finish the year higher,” Neil said.
Equities trimmed losses after a report showed service industries in the U.S. expanded in October at a faster pace than forecast. The Institute for Supply Management’s non-manufacturing index increased to 55.4 from the prior month’s 54.4, the Tempe, Arizona-based group said today. A reading above 50 shows expansion. The median estimate in a Bloomberg survey of economists was 54.
BMW dropped 2.9 percent to 81.20 euros, its biggest decline since Aug. 27. The carmaker said third-quarter earnings before interest and taxes fell 3.7 percent to 1.93 billion euros ($2.6 billion) as spending on expansion offset stronger demand for the 3-Series sedan. Revenue slipped 0.4 percent to 18.8 billion euros, even as deliveries rose 11 percent.
Daimler AG, the world’s third-biggest maker of luxury cars, lost 0.8 percent to 59.35 euros. Volkswagen AG, Europe’s largest vehicle manufacturer, slipped 0.6 percent to 190.90 euros.
Siemens lost 1.3 percent to 92.41 euros. UBS lowered its recommendation on the Munich-based company to neutral from buy, saying the shares are now trading in line with the sector.
Axel Springer AG declined 1.5 percent to 43.43 euros. Goldman Sachs Group Inc. cut its rating on Europe’s biggest newspaper publisher to sell from neutral, saying its valuation is the highest of the publishers it covers. Shares trade at 18.6 times earnings compared with 16.3 times for the DAX.
Fraport AG lost 2.1 percent to 55.63 euros. Deutsche Bank AG cut the operator of Frankfurt airport to hold from buy, saying a recovery in traffic is already priced into the shares.
Beiersdorf rallied 5.3 percent to 73.44 euros. The maker of Nivea hand cream said sales will rise 6 percent to 7 percent this year. The Hamburg-based company previously forecast revenue to increase 5 percent to 6 percent. Beiersdorf also said its Tesa adhesives unit is performing better than it anticipated.
Fresenius SE climbed 3.4 percent to 96.85 euros. The health-care group reported third-quarter adjusted net income of 271 million euros, exceeding the 258 million euros average projected by analysts. The company also reiterated that it sees 2013 net income increasing between 11 percent and 14 percent, while sales may rise as much as 10 percent.
Symrise AG jumped 5.7 percent to 32.95 euros. The fourth-largest maker of flavors and fragrances pledged to remain one of the most profitable companies in its industry amid higher demand for aroma molecules and fragrances. Earnings before interest, taxes, depreciation and amortization, will be about 20 percent of sales in 2013 and will stay in the range of 19 percent to 22 percent in coming years, the company said today.
Heidelberger Druckmaschinen AG jumped 14 percent to 2.20 euros, its biggest gain since February 2009, as it announced a digital partnership with Fujifilm Corp. Under the terms of the agreement, Heidelberger Druck will gain access to Fujifilm’s inkjet technology and its partner will in return benefit from the German company’s engineering and manufacturing activities, Heidelberger Druck said.
Sky Deutschland AG surged 5 percent to 7.55 euros, the highest price since September 2008. The pay-television said third-quarter ebitda climbed 19 percent to 29.2 million euros. Revenue jumped 19 percent from a year earlier to 392.7 million, topping analysts’ estimates.