German Stocks Advance for Second Day After Fed TaperJonathan Morgan
German stocks advanced for a second day after the Federal Reserve’s decision to slow the pace of its monthly bond purchases increased investors’ confidence in the strength of America’s economic recovery.
Deutsche Telekom AG added 3.3 percent after Reuters reported that Dish Network Corp. has considered making a bid for the German telecommunications operator’s stake in T-Mobile US Inc. Daimler AG rose 2.1 percent after agreeing to take a stake in Aston Martin Lagonda Ltd.
The DAX Index gained 1.7 percent to 9,335.74 at the close of trading in Frankfurt, posting its biggest two-day rally in five months. The equity benchmark has surged 23 percent this year as central banks around the world pledged to leave interest rates low for a prolonged period of time. The broader HDAX Index increased 1.6 percent today.
“Yesterday saw a positive surprise from the Fed where the central bank found a sweet spot by slowly reducing the stimulus and not scaring investors,” Ion-Marc Valahu, a co-founder and fund manager at Clairinvest in Geneva, wrote in an e-mail. “German equities are off to a good start and the Christmas rally seems to have started.”
The U.S. central bank said it will reduce its monthly asset purchases to $75 billion from $85 billion, tapering its quantitative-easing program.
The Fed reiterated that it will probably leave its target interest rate near zero at least as long as unemployment exceeds 6.5 percent and the outlook for inflation fails to climb above 2.5 percent. Most Federal Open Market Committee participants -- 12 out of 17 -- predict that interest rates will next increase in 2015.
About 34 percent of economists surveyed by Bloomberg on Dec. 6 had forecast that the central bank would reduce its bond-buying program at the meeting. The majority projected the Fed would delay tapering until 2014, the survey showed.
Deutsche Telekom advanced 3.3 percent to 12.37 euros. Dish has talked to Germany’s largest phone company about a potential acquisition of T-Mobile US, according to a Reuters report that cited people familiar with the matter.
Daimler added 2.1 percent to 60.86 euros after saying it will own as much as 5 percent of Aston Martin as part of an agreement to share technology with the British sports-car maker.
Daimler’s Mercedes-AMG high-performance division will develop V8 engines for Aston Martin’s next-generation models, the manufacturers said in a joint statement. The maker of Mercedes-Benz vehicles will receive shares without voting rights in the non-cash deal.
SAP AG rose 2.7 percent to 61.02 euros after Oracle Corp., which competes with the German company in providing software systems to large businesses, reported fiscal second-quarter sales and profit that beat analysts’ estimates.
MorphoSys AG increased 2.8 percent to 55.30 euros. The biotechnology company said it has expanded its clinical-development team by appointing new managers.